Capital Gains Yield 2020-01-22 08:00:00

Capital Gains Yield

The capital gains yield of a stock represents the absolute return from time 1 to time 2. It is calculated using the formula: (p2 - p1) / p1, where p1 is the price at time 1 and p2 is the price at time 2. For example, the price of the stock ABC is $100 on day 1. On day 5, it is $105. Its capital gains yield is (105 - 100) / 100 = 0.0105 or a 1.05% gain.

Capital gains yield is often used to find out the return of a stock from the time of purchase to the time of sale. In the above example, the investor would have purchased the stock at $100 and netted a $5 gain in dollar terms, resulting in a 1.05% gain. Capital gains yield doesn’t include stock dividends, which is considered total return.

 


Download The Guidebook To IPWM

Another Way To Own Investment Properties

Learn More About How Investment Property Wealth Management works.

Another Way To Own Investment Properties

Download The Guidebook To IPWM Investment Property Wealth Management
Download eBook