Question

Asked Nov 28, 2019

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You bought a stock of XYZ one year ago for $50 per share and sold it today for $55 per share. It paid a $1 per share dividend today.

- What was your realized return?
- How much of the return came from dividend yield and how much came from capital gain?

Assuming that the stock fell $5 to $45 instead.

- Is your capital gain different? Why or why not?
- Is your dividend yield different? Why or why not?

Step 1

**1.**

The realized return is __12%.__

** ****Computation of realized return:**

** **

Step 2

**2.**

** **The return from dividend yield and capital gain are** 2% and 10%.**

** ****Computation of return from dividend yield and capital gain:**

Step 3

If the stock price falls to $45:

1.

**Computation of return from capital gain:**

Yes, there is a difference in return f...

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