Consider the Following Average Annual Returns

question 21

Multiple Choice

Consider the following average annual returns:

What is the excess return for the S&P 500?

• A) 11.5%
• B) 16.3%
• C) 0%
• D) 9.3%

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Definitions:

Stock Dividends

These are dividends paid by a company to its shareholders in the form of additional shares of stock, rather than in cash.

Contributed Capital

Funds raised by a company through the issuance of shares to investors, representing the stockholders' equity apart from retained earnings.

Retained Earnings

The portion of net income left over for a business after it has paid out dividends to its shareholders, often used for reinvestment in the business or to pay down debt.

Small Stock Dividend

A dividend payment made in the form of additional shares, typically less than 25% of the existing shares.