Question

An investor receives a 15% total return by purchasing a stock for $40 and selling it after one year with a 10% capital gain. How much was received in dividend income during the year

Answer 1

$2

Step-by-step explanation:

The computation of the dividend income received during the year is shown below:

Before computing the dividend income first we have to determine the dividend percentage which is

= Total return received - capital gain after one year

= 15% - 10%

= 5%

Now the dividend income is

= Dividend percentage × stock price

= 5% × $40

= $2