# What is Capital Gains Yield?

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Capital gains yield is a measure of the change in the market price of a security, such as a stock or bond, over a certain period of time. It represents the percentage increase in the market price of the security, not including any dividends or other income earned from the security.

The capital gains yield is calculated by subtracting the initial price of the security from its final price, and then dividing this difference by the initial price. The result is then multiplied by 100 to express the change as a percentage.

For example, if an investor buys a stock for \$100 and sells it for \$120, the capital gains yield would be:

Capital gains yield = (Sale price – Purchase price) / Purchase price x 100 Capital gains yield = (\$120 – \$100) / \$100 x 100 Capital gains yield = 20%

This means that the investor earned a 20% return on their investment in the stock, not including any dividends or other income earned from the stock.

Capital gains yield is an important measure of investment performance, as it reflects the increase or decrease in the value of an investment over time. It is often used by investors to compare the performance of different investments or to evaluate the effectiveness of investment strategies.