SIE practice questionmediumTotal Return
An investor buys a stock at $50, receives $3 in dividends over the year, and sells it at $58. What is the total return?
- A16%
- B22%✓ Correct answer
- C11%
- D6%
Explanation
Why B — 22%
Total return includes both income (dividends) and capital appreciation. Capital gain = $58 - $50 = $8. Dividends = $3. Total gain = $8 + $3 = $11. Total return = $11 / $50 = 22%. Total return is the most comprehensive measure of investment performance because it captures all sources of return. Answer A (16%) only considers the capital gain, and C (6%) only considers the dividends.
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