Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1a. You buy a stock for $44 per share and sell it 1 year later for $48 after you collect a $2.00 per share dividend.

1a. You buy a stock for $44 per share and sell it 1 year later for $48 after you collect a $2.00 per share dividend. Your pre-tax capital gain yield is ________________ and your pre-tax dividend yield is ________________. (Round answer to 2 decimal places (e.g., 36.45). Use a negative sign for a negative return.)

1b.

You buy a stock for $30 per share and sell it for $36 after holding it for slightly over a year and collecting a $1 per share dividend. Your ordinary income tax rate is 28 percent and your capital gains tax rate is 15 percent. Your after-tax rate of return is__________? (Round answer to 1 decimal place (e.g., 36.0). Use a negative sign for a negative return.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Quantitative Corporate Finance

Authors: John B. Guerard Jr. Anureet Saxena, Mustafa Gultekin

2nd Edition

3030435466, 978-3030435462

More Books

Students also viewed these Finance questions

Question

How does machine learning stand to influence HR Analytics Ikigai?

Answered: 1 week ago