ReturnsDollar Returnsthe sum of the cash receivedand the change in value ofthe asset, in dollars.Time01InitialinvestmentEnding marketvalueDividendsPercentage Returns:the sum of the cashreceived and the change in value of theasset divided by the original investment.2
Dollar Return = Dividend + Change in Market ValueReturnsyieldgainscapitalyielddividenduemarket valbeginninguemarket valinchangedividenduemarket valbeginningreturndollarreturnpercentage3
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Returns: ExampleSuppose you bought 100 shares of Wal‐Mart (WMT) oneyear ago today at $25. Over the last year, you received$20 in dividends (= 20 cents per share×100 shares). Atthe end of the year, the stock sells for $30. What returndid you earn?You invested $25×100 = $2,500. At the end of the year, youhave stock worth $3,000 and cash dividends of $20. Yourdollar gain was $520 = $20 + ($3,000 – $2,500).Your percentage gain for the year isDoes it matter if you don’t sell at $30 but instead hold?$2,500$520=20.8%4