Question

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 ending-of period investment value B. dividing the asset's cash distributions during the period, minus 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 beginning-of period investment value D. dividing the asset's cash distributions during the period, plus change in value, by its beginning-of period investment value

Answer 1

dividing the asset's cash distributions during the period, plus change in value, by its beginning-of period investment value

Step-by-step explanation:

Rate of return of an investment is defined as the ratio of change of value or/and cash flows from an asset and it's initial cost of investment.

It measures the profit that a business owner gets from an asset in a given period of time.

Cash flows includes interest payments and dividends.

When rate of return is positive it results in profit but when it is negative the business is incurring a loss.

Usually rate of return is calculated within the period of one year, and is referred to as annual rate of return.