The capital gains yield (yield from growth) plus the dividend yield (yield from income) on a...

The capital gains yield (yield from growth) plus the dividend yield (yield from income) on a security is called the:

A. total return.
B. geometric return
C. average period return.
D. current yield.
E. variance of returns
.

Solutions

Expert Solution

The answer is option A) Total return

The formula for total return is

(P1 - P0) + D

where

P1 = Initial stock price

P0 = Ending stock price

D = Dividends yields

(P1 - P0) = Capital gain yields

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

What are the total return, expected dividend yield, and capital gains yield for the first year?

ABC Company just paid a dividend (Do) of $1.10. Due to a new product being introduced to the market, ABC expects to achieve a supernormal annual growth rate of 15% for the next four years. After that, growth is expected to return to the long-run constant rate of 8%. Investors require a 12% return on this stock.Question 1 : What are the total return, expected dividend yield, and capital gains yield for the first year?Question 2 : What are the...

Interest income, dividend income, and capital gains income The textbook refers to interest income being taxed...

Interest income, dividend income, and capital gains income The textbook refers to interest income being taxed as ordinary income. Explain what is meant by ordinary income and what this means for tax purposes. (1 mark) Explain why dividend income may have a preferred tax treatment. (1 mark) Explain the difference between a capital gain and a taxable capital gain by defining the percentage of capital gains (often referred to as the inclusion rate) an investor is taxed on. (1 mark)

4. A) Explain the total return, the current yield, and the capital gains yield for a...

4. A) Explain the total return, the current yield, and the capital gains yield for a bond and how each is determined. B) What is price risk for a bond? What is reinvestment risk for a bond? What bonds would have the most price risk? What bonds would have the least price risk? C) How is default risk measured for a bond? What lets you know a bond is investment grade? What lets you know that a bond is speculative...

Bond Problem: Formulas: current yield = Dollar income Capital gains = Ending value – Beg. Value...

Bond Problem: Formulas: current yield = Dollar income Capital gains = Ending value – Beg. Value Beginning value Beginning value Bond yield = current yield + capital gains yield Suppose that one year ago Cisco Systems sold a 15-year bond issue that had a $1,000 par value and a 7 percent coupon rate. Interest is paid semiannually. a. If the bond sold at $1,000 initially, what was the market interest rate when it was sold? b. If the going rate...

Identify the correct statement from the following: A - Neither dividend payments nor realized capital gains...

Identify the correct statement from the following: A - Neither dividend payments nor realized capital gains are subject to taxes. B - Realized capital gains are subject to taxes while dividend payments are not. C - Both dividend payments and realized capital gains are subject to taxes. D - Dividend payments are subject to taxes while realized capital gains are not.

1. Over the next year, what is the current yield, capital gains yield, and total return...

1. Over the next year, what is the current yield, capital gains yield, and total return (or total yield) of a 5 year bond with a 4% YTM and a coupon rate of 5%? Assume the YTM over the next year remains the same. 2. Same question as above, except the YTM at the end of the year has risen to 4.5%. (

Based on current dividend yields and expected capital gains, the expected return on portfolios A and...

Based on current dividend yields and expected capital gains, the expected return on portfolios A and B are 11% and 14% respectively. The beta of A is 0.8 while that of B is 1.5. The rate of exchange fund bill is currently 6%, while the expected return of the Hang Seng Index is 12%. The standard deviation of portfolio A is 10%, while that of B is 31%, and that of the index is 20%. a. If you currently hold...

Assume that the tax rate on capital gains is 15%, while the tx rate on dividend...

Assume that the tax rate on capital gains is 15%, while the tx rate on dividend income is 20 %. An investor is comparing two options for the stock of ABC firm: I) receive $100 of dividend income now, II) get unrealized capital gains of $100 now which are left to grow with the firm for five years. The expected rate of return on the stock of ABC firm is 8%. The investor will invest his after-tax dividend income in ABC...

Capital Gains

A house in the UK was bought for £330,000 in 2005, and sold for £435,000 in 2020. What is the Capital Gains?

Choose all correct statements. 1. Dividend growth rate is equivalent to the dividend yield. 2. The...

Choose all correct statements. 1. Dividend growth rate is equivalent to the dividend yield. 2. The total return on a stock is equal to the dividend yield plus the capital gains yield. 3.The benchmark PE ratio can be used to value the stock of firms that pay no dividends. 4.Assume the constant dividend growth model. An increase in the capital gains yield will increase the current value of a stock. Choices II, III and IV only II only II and...

Subjects