Asked by Gabriella Gonzales on Jul 21, 2024
Verified
For a stock that does not pay a dividend, the total return can also be defined as the:
A) Risk premium plus the inflation rate.
B) Capital gains rate.
C) Real rate of return.
D) Financial rate of return.
E) Nominal after-tax rate of return.
Total Return
The complete return on an investment over a specified period, including both capital gains and income received.
Dividend
A portion of a company's earnings that is paid to shareholders or owners as a distribution of profits.
Capital Gains Rate
The tax rate applied to the profit made from selling an asset at a higher price than its purchase price.
- Explain the elements and formulas used in determining nominal and real returns.
Verified Answer
CE
Courtney Esteban BrownJul 25, 2024
Final Answer :
B
Explanation :
The total return for a stock that does not pay a dividend is defined by the capital gains rate, which is the percentage change in the stock's price over a given period.
Learning Objectives
- Explain the elements and formulas used in determining nominal and real returns.