You purchased a stock at the end of the prior year at a price of $73. At

Question:

You purchased a stock at the end of the prior year at a price of $73. At the end of this year the stock pays a dividend of $1.20 and you sell the stock for $78. What is your return for the year? Now suppose that dividends are taxed at 15 percent and long term capital gains (over 11 months) are taxed at 30 percent. What is your after tax return for the year?

Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...