An investor purchases two different assets at the beginning of the year for $1,000 each.
- Asset A provides a $50 cash payment to the investor during the year, but its market price at the end of the year is $950.
- Asset B provides no cash payment, but its market price at the end of the year is $1,020.
Which statement best analyzes the contribution of the market price change to each asset's overall rate of return for the year?
0
1
Tags
Economics
Economy
Introduction to Macroeconomics Course
Ch.6 The financial sector: Debt, money, and financial markets - The Economy 2.0 Macroeconomics @ CORE Econ
The Economy 2.0 Macroeconomics @ CORE Econ
CORE Econ
Social Science
Empirical Science
Science
Analysis in Bloom's Taxonomy
Cognitive Psychology
Psychology
Related
Calculating Rate of Return on a Stock Investment (Capital Gains Only)
Market Price Uncertainty as a Source of Investment Risk
The Role of News in Share Price Fluctuations
Positive Feedback from Price Signals in Asset Markets
An investor purchases two different assets at the beginning of the year for $1,000 each.
- Asset A provides a $50 cash payment to the investor during the year, but its market price at the end of the year is $950.
- Asset B provides no cash payment, but its market price at the end of the year is $1,020.
Which statement best analyzes the contribution of the market price change to each asset's overall rate of return for the year?
Evaluating Investment Performance
Analyzing Sources of Investment Returns
An investor who buys a marketable asset is guaranteed a positive rate of return as long as the asset generates a steady stream of income payments (e.g., rent or dividends), regardless of what happens to the asset's market price.