An Annualized Return

question 25

Multiple Choice

An annualized return:

• A)is less than a holding period return when the holding period is less than one year.
• B)is expressed as the summation of the capital gains yield and the dividend yield on an investment.
• C)is expressed as the capital gains yield that would have been realized if an investment had been held for a twelve-month period.
• D)is computed as (1 + holding period percentage return)^m, where "m" is the number of holding periods in a year.
• E)is computed as (1 + holding period percentage return)^m, where "m" is the number of months in the holding period.

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Definitions:

Retained Earnings

Retained earnings refer to the cumulative amount of net income a company retains, rather than distributing it to shareholders as dividends.

Net Income

The remainder of a company's total revenue after deducting taxes, expenses, and any other costs.

Shareholders' Equity

The portion of the company's assets that belongs to the shareholders after all liabilities have been subtracted.

Dividends in Arrears

Unpaid dividends of cumulative preferred stock for the designated period.