please assit with the above An investment\'s capital gain or loss is an importan

Question

please assit with the above

An investment's capital gain or loss is an important component of its yield. Read each statement about capital gains 3nd indicate whether it is true or false. Riley owns 200 shares of common stock of Orcus Mining Co. The shares were purchased three years ago for $30.00 per share. Orcus pays an annual dividend of $2.00 per share, and the shares have a current market value of $40.00 per share. Given this information, what is Riley's three-year yield on her Orcus shares? 56.00% 66.66% 45.33% 53.33%

Explanation / Answer

Question 1: True. Because capital gain is determined by comparing appreciation of ending price against beginning price.

Question 2: False. Because capital gain and dividend income adds upto give yield and so it increases yield.

Question 3: True. Because capital gain = ending price - beginning price

Question 4: True. Because capital gain (loss) is determined by comparing appreciation (decrease) of ending price against beginning price.

Question 5: Yield = [($40 - $30) + $2 * 3] / $30 * 100%

= 53.33% which is the 4th option.

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