Question

What two components make up the total return to an investor valuing shares of stock ?

What two components make up the total return to an investor valuing shares of stock ?

Homework Answers

Answer #1

the two components are :

1) Dividend payments

2) Capital appreciation

Dividend payments are majorly considered in various models to value a stock.this is one of the component that make up the total return to a investor

holdind period return on a stock = (dividend for the year + year end price - year beginning price) / year beginning price

the difference between year end price and year beginning price is called Capital appreciation.(some times there will be losses also)

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