Phil Realized a Total Return of 13

question 23

Multiple Choice

Phil realized a total return of 13.2 percent which is less than his expected return of 14.4 percent.What is the amount of his unexpected return?

• A)-1.2 percent
• B)-0.6 percent
• C)0.6 percent
• D)1.2 percent
• E)1.3 percent

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Definitions:

Dividend-payout Policy

A company's approach to distributing earnings to its shareholders, either in the form of cash dividends or stock repurchases.

Marginal Tax Bracket

The tax rate that applies to the last dollar of the taxpayer's income, indicating the rate at which additional income will be taxed.

After-tax Return

The profit from an investment after all taxes have been subtracted, indicating the net gain to the investor.

Time Horizons

The length of time over which an investment is expected to be held before it is liquidated, ranging from short-term to long-term periods.