Chapter 9, Problem 3Q

Summary Introduction

To identify: The effect of more dividends on dividend yield and capital gains yield.

Introduction:

Capital Gain: The capital gain is the benefit realized due to price appreciation of a security, usually the shares. It is used to evaluate the investment in a particular stock and determines the change in prices at two time period as a percentage of initial stock price.

Dividend Yield: The dividend is the portion of earnings that is distributed to the stockholders of the company. When this dividend is mentioned as the percentage of current market price, it is called the dividend yield.