Question

You put up $60 at the beginning of the year for an investment. The value of the investment grows TO $62.4 and you earn a dividend of $3.50. Your HPR was ____, capital gains yield was ____ and dividend yield was _____.  

	A.	5.83%, 4%, 1.83%
	B.	11%, 5%, 6%
	C.	4%, 3%, 1%
	D.	9.83%, 4%, 5.83%
	E.	1.83%, 1%, 0.83%

Answer 1

Capital appreciatio in a year on investment = value of investment the end - value of investment at the beginning

=62.4 - 60

= $ 2.4

Dvidend received during the year = $ 3.5

Holding period return = (Capital appreciation + Dividend income)/value of investment at the beginning

= (2.4 + 3.5)/60

= 5.9/60

= 9.83%

Capital gain yield = Capital appreciation/value of investment at the beginning

= 2.4/60

= 4%

Dividend yield = Dividend income / value of investment at the beginning

= 3.5/60

= 5.83%

option (d) should be the correct option.