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Capital Gain on Housing
For a housing asset, the capital gain component of its rate of return is defined as the percentage change in the house's market value over the holding period.
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Introduction to Macroeconomics Course
Ch.6 The financial sector: Debt, money, and financial markets - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
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Formula for Decomposing the Percentage Rate of Return
Definition of Capital Gain or Loss
Capital Gain on Housing
International Comparison of Housing Return Components
Net Rental Income as the Income Component for Rented Housing
Imputed Rent as the Income Component for Owner-Occupied Housing
An investor is comparing two different assets, Asset A and Asset B. Over the past year, both assets provided an identical total percentage rate of return of 7%. However, the source of the return differed significantly:
- Asset A's return consisted of a 6% increase in its market price and a 1% income payment.
- Asset B's return consisted of a 1% increase in its market price and a 6% income payment.
Based on this breakdown of their returns, what is the most accurate conclusion to draw about the two assets?
Calculating Components of Investment Return
Investment Strategy for a Retiree
An investor analyzes the performance of a stock they purchased for $100. After one year, they sold the stock for $105 and also received a $3 dividend. Match each financial concept to its corresponding calculated value based on this scenario.
An investor purchases a share for $50. Over the year, the share's price falls to $48, but the company pays a dividend of $3 per share. In this situation, the investor has experienced a negative total percentage rate of return for the year.
Investment Return Components and Risk Profile
When decomposing the total percentage rate of return, the component that represents the percentage change in an asset's market price is known as the ____.
An investor needs to determine the total percentage rate of return from a stock held for one year by first breaking the return down into its two main components. Arrange the following calculation steps into the correct logical sequence.
Investment Decision Based on Return Components
An investor purchased a stock for $200. After one year, the stock's market price is $190. During the year, the investor also received a dividend of $15. Which of the following statements most accurately analyzes the performance of this investment based on the decomposition of its percentage rate of return?
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Calculation of Long-Term Real Capital Gain on Housing
An individual purchases a house for $400,000. One year later, they sell the same house for $440,000. Assuming there are no other costs or income associated with the property, what is the capital gain on this housing investment?
Isolating Capital Gain in a Real Estate Investment
Analyzing Components of Housing Return
An investor buys a residential property for $500,000. Over the next year, the market value of the property increases to $525,000, and the investor collects $20,000 in rental income. The capital gain on this housing asset for the year is calculated by adding the $25,000 increase in market value to the $20,000 in rental income.
Match each housing investment scenario to its correct capital gain percentage for the holding period.
An investor sold a house for $525,000, realizing a capital gain of 5% for the one-year holding period. The original purchase price of the house was $______. (Enter a number only, without commas or currency symbols).
Evaluating Housing Investment Strategies
A real estate investor wants to calculate the capital gain percentage on a property they owned for one year. Arrange the following steps into the correct logical sequence to perform this calculation.
An investor is comparing the performance of two properties they owned for one year.
- Property X was purchased for $200,000 and sold for $220,000. It also generated $15,000 in rental income.
- Property Y was purchased for $500,000 and sold for $540,000. It also generated $10,000 in rental income.
Based solely on the capital gain component of return, which property performed better as a percentage of its initial price?
An individual buys a house for $250,000. One year later, the market value of the house has decreased to $240,000. During that year, the owner also received $15,000 in rental payments. Which of the following statements correctly identifies and calculates the capital gain (or loss) for this period?