Equity Investments Q78
| Security | Beginning of period price $ | End of period price $ | TotalDividends $ |
| A | 20 | 15 | 2 |
| B | 40 | 48 | 4 |
| C | 60 | 60 | 9 |
The total return of the index is closest to:
- Option : C
- Explanation : The total return of an index is the price appreciation, or change in the value of the price return index, plus income (dividends and/or interest) over the period, expressed as a percentage of the beginning value of the price return index. Return of A: (15 − 20 + 2)/20 = −15% Return of B: (48 − 40 + 4)/40 = 30% Return of C: (60 − 60 + 9)/60 = 15% An equal-weighted index applies equal weight to each security‟s return; therefore, the total return = 1/3 ∗ (−15% + 30% + 15%) = 10%.
