Question The rate of return or yield,

Question : Question The rate of return or yield, : 6299


The rate of return or yield, is the total return on an investment expressed as a percentage of its purchase price The rate of return is usually stated on an annualized basis. For example, if you have an investment worth $1,000 that yields $120 of total return per year, then the investment would have a 12% annual rate of return (or yield). Consider the following example: Jenny has purchased 100 shares of V&V; Construction stock at a purchase price of $40 per share. Over the next year, V&V; Construction pays a total of $6 per share in dividends to its shareholders. At the end of the year, Jenny sells her V&V; Construction stock for $53 per share. In addition, Jenny paid a transaction cost of $1 per share both at the time of purchase and at the time of sale. Part A-Current Income (Dividends): Over the year that Jenny owns her shares of V&V; Construction stock, she receives a total of in current income in the form of dividends. Part B-Capital Gains: The total amount that Jenny has paid for her V&V; Construction stock is (total purchase amount plus transaction costs). The total amount of money that Jenny receives after selling her shares of V&V; Construction stock is (total sale amount minus transaction costs). Therefore, Jenny's investment achieves a capital gain of

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Taxation 1 Year Ago 164 Views
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