Which of the Following Incorporates the Amount of Investment into the Performance

question 36

Multiple Choice

Which of the following incorporates the amount of investment into the performance measure?

• A)dividend income
• B)residual income
• C)return on investment
• D)both residual income and return on investment
• E)both dividend income and residual

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Definitions:

Bond

A fixed income instrument that represents a loan made by an investor to a borrower, typically corporate or governmental.

Zero-Coupon Bond

A bond paying no coupons that sells at a discount and provides only payment of face value at maturity.

Discount Rate

The interest rate used to discount future cash flows to their present values, often used in investment appraisal and risk assessment.

Duration

The measure of the sensitivity of the price of a bond or other debt instrument to changes in interest rates, often expressed in years.