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.