The return from investing in the shares of common stock has two components: cash dividends and the change in the market price of the common stock.

Question

Quizplus · Accepted Answer

The cash dividends represent the income generated by the investment in the common stock, while the change in the market price of the common stock reflects the capital appreciation or depreciation of the investment. Therefore, both components contribute to the total return of the investment in common stock.

The Return from Investing in the Shares of Common Stock