If Share Price Falls from $15 to $12 Per Share

question 41

Multiple Choice

If share price falls from $15 to $12 per share, and pays a dividend of $1 per share, what was the rate of return to shareholders?

• A) 13.33%
• B) -13.33%
• C) 16.67%
• D) -16.67%

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Definitions:

SML

Stands for the Security Market Line, representing the expected return of investments as a function of their non-diversifiable risk.

Risk-Free Asset

An investment that is expected to return its full face value with zero risk of financial loss.

Required Rate of Return

The minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular security or project.

Total Risk

Represents the full spectrum of all types of risk associated with an investment, including both systematic and unsystematic risks.