the YTD capital gains yield on a common stock is 6 as of yes

the YTD capital gains yield on a common stock is 6% as of yesterday’s closing date. If the stock closed at $40 yesterday. What is the closing price of the stock on last December 31st ?

Solution

year to date return = (current price - last december 31 price) / last december price

=>6% = ($40 - last december 31 price) / last december price

=> last december price * 0.06 = $40 - last december price

=>1.06 * last december price = $40.

=>last december price = $40 / 1.06

=>last december price = $37.74.....(rounded to two decimals).