Consider the following price and dividend data for Quicksilver Inc.: Date Price
ID: 2788127 • Letter: C
Question
Consider the following price and dividend data for Quicksilver Inc.:
Date
Price ($)
Dividend ($)
December 31, 2004
$14.01
January 26, 2005
$13.47
$0.13
April 28, 2005
$9.14
$0.13
July 29, 2005
$10.74
$0.13
October 28, 2005
$8.02
$0.13
December 30, 2005
$7.72
Assume that you purchased Quicksilver's stock at the closing price on December 31, 2004 and sold it after the dividend had been paid at the closing price on January 26, 2005. Your capital gains rate (yield) for this period is closest to ________.
A) 0.93%
B) 1.02%
C) -3.85%
D) -2.93%
Date
Price ($)
Dividend ($)
December 31, 2004
$14.01
January 26, 2005
$13.47
$0.13
April 28, 2005
$9.14
$0.13
July 29, 2005
$10.74
$0.13
October 28, 2005
$8.02
$0.13
December 30, 2005
$7.72
Explanation / Answer
Capital gains rate does not include the dividend paid. It is the change in the stock price divided by the initial price
Capital gains rate = (Final price - Initial price)/Initial price
= (13.47-14.01)/14.01 = -0.0385 = -3.85%
Option C.