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Fundamentals of Financial Management, Third Edition by Vyuptakesh Sharan

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3.1 BASIC CONCEPTS OF RETURNS

3.1.1 Percentage Return

Return is the reward of making investment. If you buy a share of Rs 100 and get a dividend of Rs 12 at the end of the year, the return in rupee terms will be Rs 12. The percentage return will be:

 

12/100 = 0.12 or 12%

The percentage return in the form of dividend is also known as dividend yield which is simply the amount of dividend at the end of the year divided by the initial price of the share. In terms of an equation,

If you buy a share for Rs 100, the market price of share moves up to Rs 130 at the end of the year; the amount of increase is known as capital gains. Capital gain is also ...

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