BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Actual Return is calculated by the formula
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((Income+ Capital Gain) / Purchase Price )*100
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((Income-Capital Gain) / Purchase Price )*100
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((Income+ Capital Gain) / Selling Price )*100
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((Income Capital Gain) / Selling Price )*100
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Explanation:
Detailed explanation-1: -A simple rate of return is calculated by subtracting the initial value of the investment from its current value, and then dividing it by the initial value. To report it as a %, the result is multiplied by 100.
Detailed explanation-2: -Capital gains yield is calculated the same way for a bond as it is for a stock: the increase in the price of the bond divided by the original price of the bond. For instance, if a bond is purchased for $100 (or par) and later rises to $120, the capital gains yield on the bond is 20%.
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