Question: About a year ago Nigel Palmer bought some shares in
About a year ago, Nigel Palmer bought some shares in the Equity Partners Mutual Fund. He bought the fund at $24.50 a share, and it now trades at $26. Last year, the fund paid dividends of 40 cents a share and had capital gains distributions of $1.83 a share. Using the approximate yield formula, what rate of return did Nigel earn on his investment? Repeat the calculation using a handheld financial calculator. Would he have made a 20 percent rate of return if the stock had raised to $30 a share?
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