You buy a stock for $34 per share and sell it for $36 after you collect a $1.00 per share dividend. Your pre-tax capital gain yield is ________________ and your pre-tax dividend yield is ________________. A.5.88%; 2.94% B.2.94%; 2.78% C.8.82%; 0.00% D.5.56%; 2.78%

The dividend yield is calculated.in order to understand the composition of dividend policy and…

Answered: You buy a stock for $34 per share and…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 5P

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You buy a stock for $34 per share and sell it for $36 after you collect a $1.00 per share dividend. Your pre-tax capital gain yield is ________________ and your pre-tax dividend yield is ________________.

A.

5.88%; 2.94%

B.

2.94%; 2.78%

C.

8.82%; 0.00%

D.

5.56%; 2.78%

Definition Definition Tax imposed by the government on the "gain" or increase in the value of an asset at the time of its sale by the owner. Capital gain is computed based on the purchase price and sale price of the asset. If the sale price of the asset is more than the purchase price, there is a gain on the sale of asset. A tax is imposed on such gain in accordance with the applicable tax rates at the time of sale.

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