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.

---

Definitions:

Credit Financing

The process of borrowing funds from lenders to finance business operations, purchases, or investments, typically through loans or issuing bonds.

Source Of Financing

Various means through which a business can obtain funds, including equity, debt, grants, and loans, to support its operations.

Accounts Receivable Balance

The total amount of money owed to a company by its customers for goods or services delivered but not yet paid for.

Credit Policy

The guidelines that a company follows to determine the amount of credit to extend to customers or borrowers.