The total rate of return on an investment over a given period of time is calculated by ________.
A) dividing the asset's cash distributions during the period, plus change in value, by its beginning-of period investment value.
B) dividing the asset's cash distributions during the period, plus change in value, by its ending-of period investment value.
C) dividing the asset's cash distributions during the period, minus change in value, by its ending-of period investment value.
D) dividing the asset's cash distributions during the period, minus change in value, by its beginning-of period investment value.

Question

Quizplus · Accepted Answer

The total rate of return on an investment over a given period of time is calculated by dividing the asset's cash distributions during the period, plus change in value, by its beginning-of period investment value. This is because the return on investment takes into consideration both the income (cash distributions) and capital gains (change in value) of the investment, and calculates it relative to the initial investment value at the beginning of the period.

The Total Rate of Return on an Investment Over a Given