You purchased XYZ stock at the closing price on December 31, 2015, and sold it after...

You purchased XYZ stock at the closing price on December 31, 2015, and sold it after the dividend had been paid at the closing price on January 26, 2016. Given the following Price and Dividend data for XYZ, your dividend yield for this period is closest to ______________ and your capital gains rate (yield) for this period is closest to _______________________.

Date	Price	Divedened
December-31-2015	17.5
jan-26-2016	16.25	0.3
july-29-2016	13.7	0.3
December-30-2016	8.9

a	1.7%; 92.8%
b	1.8%; -7.1%
c	1.8%; 7.1%
d	1.7%; 7.1%
e	1.7%; -7.1%

Expert Solution

	Given,

	Date	Price	Dividend
	31/12/2015	17.50
	26/01/2016	16.25	0.30

	That means,
	Initial Stock Price (P0) = Price as on 31/12/2015
			=17.50

	Ending Stock Price (P1) = Price as on 26/01/2016
			=16.25

	So now,
a)	Dividend Yield = Dividend Received / Initial Stock Price *100
		= 0.30 / 17.50 *100
		=1.7%

b)	Capital Gains Rate
	= (Ending Stock Price - Initial Stock Price) / Initial Stock Price * 100
	= (16.25 - 17.50) / 17.50 *100
	= -1.25 / 17.50 *100
	= -7.1%

	Answer is (e) 1.7%, -7.1%

jeff jeffy answered 1 year ago

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