What Are the Components in Determining the Real Rate of Return

question 46

Multiple Choice

What are the components in determining the real rate of return?

• A)The risk premium
• B)The inflation factor
• C)The required rate of return
• D)Both a) and b) above
• E)None of the above

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Definitions:

Dividend Payout Ratio

A financial indicator showing the proportion of a company's profits distributed to its shareholders as dividends.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from revenues. It's often referred to as the bottom line.

Capital Intensity Ratio

A metric that measures the amount of assets needed by a company to generate one dollar of revenue.

Operating Capacity

The maximum amount of work or output a company can produce in a set period under normal working conditions.