You Purchase 100 Shares of Stock at a Price of $45

question 6

Multiple Choice

You purchase 100 shares of stock at a price of $45 per share. One year later, the shares are selling for $47 per share. In addition, a dividend of $4 per share is paid at the end of each year.

What is the capital gains yield for the investment?

• A) 4.4%
• B) 5.5%
• C) 8.5%
• D) 8.9%
• E) 13.3%

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Definitions:

Market Price

The rate at which an asset or service is currently trading in the market.

Shares Outstanding

The total number of shares of a corporation's stock that are currently owned by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company’s officers and insiders.

Market Price

The market rate at which an asset or service can currently be sold or bought.

Stock Split

A corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares.