Rate of Return on an asset for a given period (usually a period of one year) is defined as.
Illustration:
Price at the beginning of the year : Rs.75
Dividend paid at the end of the year : Rs.3
Price at the end of the year : Rs.90
Therefore the rate of return on this stock is
This rate of return may be broken down as follows
Thus we have 4 % current yield and 2% capital gains yield.