Ch 13: Assignment - Investment Fundamentals 4. Rate of return (yield) 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: Kim has purchased 100 shares of A&S Communications stock at a purchase price of $40 per share. Over the next year, A&S Communications pays a total of $6 per share in dividends to its shareholders. At the end of the year, Kim sells her A&S Communications stock for $53 per share. In addition, Kim 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 Kim owns her shares of A&S Communications stock, she receives a total of $ dividends. in current income in the form of Part B-Capital Gains: The total amount that Kim has paid for her A&S Communications stock is $ her shares of A&S Communications stock is $ The total amount of money that Kim receives after selling Therefore, Kim's investment achieves a capital gain of $ Part C-Total Return: Over the year that she owns the A&S Communications stock, Kim earns a total return of $ Part D-Rate of Return (Yield): The rate of return on an investment is the total return on the investment expressed as a percentage of its price. Calculate the rate of return by dividing the total return by the total purchase price (not including transaction costs because these are already taken into account in the capital gains portion of the total return). Round your rate of return to two decimal places. In the example given, the total return is $ rate of return on Kim's investment in A&S Communications stock is and the total purchase price (excluding transaction costs) is $ 96. Therefore, the