To Calculate the Return on a Stock That Pays a Year-End

question 8

Multiple Choice

To calculate the return on a stock that pays a year-end dividend, an investor should:

• A) divide the stock's sale price by its purchase price and subtract 1.
• B) add the dividend and sale price, divide by the purchase price and subtract 1.
• C) divide the sale price by the purchase price and add the dividend yield.
• D) divide all cash flows received by the selling price and subtract 1.