The Receipt of Dividends on an Investment Affects the Stock

question 91

Multiple Choice

The receipt of dividends on an investment affects the Stock Investment account when which of the following methods is used?

• A) Cost method.
• B) Equity method.
• C) Combination method.
• D) Market method.

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Definitions:

Risk Premium

The excess return that an investment is expected to yield over a risk-free rate as compensation for its higher risk.

Canadian Common Stocks

Shares representing ownership in Canadian companies, traded on stock exchanges and entitling holders to voting rights and dividends.

Arithmetic Return

The simple average of a series of returns generated over a period of time, providing a basic measure of investment performance.

Investment

The allocation of resources, typically money, with the expectation of generating an income or profit.