Solutions to Chapter 1

1. Dividend yield = dividend/initial share price = $2/$40 = 0.05 = 5%. Capital gains yield = capital gain/initial share price = $4/$40 = 0.10 = 10%. Dividend yield = $2/$40 = 0.05 = 5%. The dividend yield is unaffected; it is based on the initial price, not the final price. Capital gain = $36 – $40 = ($4. Capital gains yield … ................
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