If a Stock Pays Dividends at the End of Each

question 29

Multiple Choice

If a stock pays dividends at the end of each quarter,with realized returns of R₁,R₂,R₃,and R₄ each quarter,then the annual realized return is calculated as

• A) R_annual =
• B) R_annual = (1 + R₁)(1 + R₂)(1 + R₃)(1 + R₄)
• C) R_annual = (1 + R₁)(1 + R₂)(1 + R₃)(1 + R₄) - 1
• D) R_annual = R₁ + R₂ + R₃ + R₄

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Definitions:

Operating Cost

Expenses associated with the day-to-day running of a business, such as rent, utilities, and salaries.

Annual

Occurring once every year.

Absolute Value

The distance of a number from zero on the number line, without considering direction; always non-negative.