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You bought a stack one year ago for $50.00 per share and sold it today for $55.00 per share. It paid a $1.00 per share dividend today. If you assume that the stock fell $5.00 to $45.00 instead a. Is your capital gain different? Why or why not? b. Is your dividend yield different? Why or why not? a. Is your capital gain different? Why or why not? (Select the best choice below) OA. The capital gain will be different because the dividend did not change. OB. The capital gain will not be different because the purchase price did not change OC. The capital gain will be different because the selling price has changed. OD. The capital gain will not be different because the selling price is less than the purchase price b. Is your dividend yield different? Why or why not? (Select the best choice below) CA The dividend vield will not be different because the dividend is the same and the change in selling price OB. The dividend yield will not be different because the selling price impacts dividend yield OC The dividend yield will be different because the selling price decreased not effect the dividend yield

User Mcsky
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Final answer:

The capital gain is different because the selling price has changed, leading to a different capital gain or loss. The dividend yield is not different because it is calculated based on the purchase price of the stock and the dividend amount, which have not changed.

Step-by-step explanation:

The capital gain or loss on a stock is determined by the difference between the purchase price and the selling price. If the stock was purchased for $50.00 per share and sold for $55.00 per share, there is a capital gain of $5.00 per share. However, if the stock actually fell to $45.00, the capital gain would be different since the selling price has changed, leading to a capital loss of $5.00 per share.

Capital Gain: OB. The capital gain will not be different because the purchase price did not change is incorrect because the selling price has changed resulting in a different capital gain or loss, so the correct answer is OC. The capital gain will be different because the selling price has changed.

For the dividend yield, which is calculated as the annual dividends per share divided by the price per share, if the dividend remains $1.00 per share, the yield would change. However, the dividend yield in this context typically refers to the income received (dividend) relative to the purchase price of the stock, not the selling price. In both scenarios, a $1.00 dividend on a $50.00 stock purchase remains the same in terms of yield. Therefore, the dividend yield is the same: CA. The dividend yield will not be different because the dividend is the same and the change in selling price does not affect the dividend yield.

User Bullets
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