1. What is Capital Gains Yield?

Capital Gains Yield (CGY) is the percentage price appreciation on an investment. It shows how much the price of an asset has increased relative to its original purchase price, excluding any dividends or income.

2. How Does the Calculator Work?

The calculator uses the Capital Gains Yield formula:

Where:

• \( P_{begin} \) — Initial purchase price of the investment
• \( P_{end} \) — Current or selling price of the investment

Explanation: The formula calculates the percentage change in price from the initial purchase to the current or selling price.

3. Importance of Capital Gains Yield

Details: CGY is important for investors to assess the price appreciation component of their total return. It helps compare the performance of different investments based solely on price changes.

4. Using the Calculator

Tips: Enter the initial purchase price and current/selling price in the same currency. Both values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: How is CGY different from total return?
A: CGY only considers price appreciation, while total return includes both price changes and any dividends or income received.

Q2: Can CGY be negative?
A: Yes, if the current price is below the purchase price, CGY will be negative, indicating a capital loss.

Q3: How does CGY relate to holding period return?
A: For investments without dividends, CGY equals the holding period return. With dividends, holding period return is CGY plus dividend yield.

Q4: Should I use CGY for short-term or long-term investments?
A: CGY can be used for any time period, but it's often annualized for comparison purposes when dealing with different holding periods.

Q5: How does CGY help in portfolio management?
A: It helps investors identify which assets are contributing most to price appreciation in their portfolio and make rebalancing decisions.