ECONOMICS
RISK AND RETURN
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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The firm of Sun and Shine purchased a share of Acme.com common stock exactly one year ago for Rs45. During the past year the common stock paid an annual dividend of Rs2.40. The firm sold the security today for Rs85. What is the rate of return the firm has earned?
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5.30%
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194.20%
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88.90%
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94.20%
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Explanation:
Detailed explanation-1: -Systematic Risk is the variability of return on stocks or portfolios associated with changes in return on the market as a whole.
Detailed explanation-2: -Volatility is a statistical measure of the dispersion of returns for a given security or market index.
Detailed explanation-3: -The Capital Asset Pricing Model (CAPM) describes the relationship between systematic risk, or the general perils of investing, and expected return for assets, particularly stocks.1 It is a finance model that establishes a linear relationship between the required return on an investment and risk.
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