IL. Computations 16. You purchasod 6 shares of stock for $25, but the market is
ID: 2809555 • Letter: I
Question
IL. Computations 16. You purchasod 6 shares of stock for $25, but the market is taking a downturm. One year ater you received $3 per share as dividends and sold all the share for $20. Answer the following a. What is the capital gains yield? ANS: b. What is the dividend yield? ANS c. What is your dollar profit or loss amount? ANS: d. What it a loss or gain? ANS e. What is your holding period return(% retum? ANS: 7. A n investor purchased a bond 30 days ago for $1,050. He received $12 in interest and sold the bond for $1,100. What is the holding period return (% return) on his invest- ment? ANS: FIN 344 Quiz 1 C-3Explanation / Answer
Shares a.Capital gains yield = (stock price at sale period - initial stock price )/Initial stock price = (20 - 25 ) / 25 = -20% b.Dividend yield = Dividend / current share price = 3 / 20 = 15% c.Dollar profit or loss = ( 6 * 20 ) - ( 6 * 25) + ( 3 * 6 ) = -12 d. What is loss or gain = loss of $12 e.Holding period return = ( 18 -30 ) / 120 = -10% Bond Holding period return = [ Interest Income + (sale price - purchase price )]/Purchase price Holding period return = [ 12 + (1100 - 1050 )]/1050 = 5.90%