Question

In: Finance

1. shareholders earn returns through ________. a. earnings from increases in share price and interest income...

1. shareholders earn returns through ________.

a. earnings from increases in share price and interest income

b. earnings from increases in stock price and cash dividends

c. capitalization and retained earnings

d. interest and earnings per share

Solutions

Expert Solution

Option B- Earnings from increases in stock price and cash dividend.

Total shareholder return is the financial gain that results from a change in the stock's price plus any dividends paid by the company during the measured interval divided by the initial purchase price of the stock.

TSR = (current price - purchase price) + dividends)

    purchase price

Here change in stock price means the Capital Gains -When you buy a stock at one price and it appreciates, the difference is known as a capital gain and Dividends means -When a company generates net income, it may decide to take some of that money and distribute it to stockholders.

jeff jeffy answered 2 years ago
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