Asked Nov 1, 2019

You buy stock for $34 per share and sell it for $36 after you collect a $1 per share dividend, your pre tax capital gain is _______________, and your pre tax dividend is  ____________?

A. 2.94%; 2.78%

B. 8.82%; 0.00%

C. 5.88%; 2.94%

D. 5,56%; 2.78%

E. 4.65%; 3.71%



Expert Answer

Step 1

Price of Stock = $34

Selling Price of Stock = $36


Calculation of Pre-tax Capital gain is as follows:


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Selling Price of Stock - Price of Stock -x 100 Pre-tax Capital Gain = Price of Stock $36-$34 x 100 $34 $2 - x 100 $34 =0.0588 x100 = 5.88%

Step 2

Price of the Stock = $34

Dividend per Share = $1




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Dividend per Share -x 100 Pre-tax Dividend Price of Stock $1 - x100 $34 =0.0294 x 100 =2.94%


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