If a stock pays dividends at the end of each quarter, with realized returns of R₁, R₂, R₃, and R₄ each quarter, then the annual realized return is calculated as ________. A)R_annual= (1 + R₁)(1 + R₂)(1 + R₃)( 1 + R₄)- 1 B)R_annual= R₁ + R₂ + R₃ + R₄ C)R_annual= (1 + R₁)(1 + R₂)( 1 + R₃)( 1 + R₄) D)R_annual=

Question

Quizplus · Accepted Answer

The annual realized return can be calculated by using the formula for compound interest: (1 + R₁) * (1 + R₂) * (1 + R₃) * (1 + R₄) - 1, which gives the growth rate of the initial investment over the year, considering the quarterly dividends. Therefore, choice A is the correct answer.

If a Stock Pays Dividends at the End of Each