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Memphic Memphic
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7 years ago
Suppose you plan on purchasing Von Bora stock in one year, right after the $1.40 dividend is paid.  You then plan on selling your stock at the end of year two, right after the $1.50 dividend is paid.  The capital gain rate that you will receive on your investment is closest to:
A) 4.00%
B) 3.75%
C) 6.25%
D) 3.50%
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
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#1
7 years ago
B
Explanation:  B) P1 =   =   = $24.10

So capital gain rate = (P2 - P1)/P1 = ($25.00 - $24.10)/$24.10 = .03734 or 3.73%
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