Question

Your investment over one year yielded a capital gains yield of 5% and no dividend yield. If the

sale price was $114 per share, what was the cost of the investment?
A) $119.43
B) $103.14
C) $108.57
D) $114.00

Answer 1

C) $108.57

Step-by-step explanation:

Given data:

Capital gains yield (CGY) = 5%

Dividend yield = 0%

Sale price (S) = $114 per share

Capital gains yield is defined as a function of initial investment (I) and sale price (S) as follows:

`CGY= (S-I)/(I)\\ 0.05 = (114-I)/(I) \\I=(114)/(1.05) \\I= \$ 108.57`

The initial cost of the investment was $108.57.