If a share pays dividends at the end of each quarter, with realised returns of R₁, R₂, R₃ and R₄ each quarter, then the annual realised return is calculated as: A)R_annual= R₁ + R₂ + R₃ + R_4. B)R_annual= (1 + R₁)(1 + R₂)(1 + R₃)(1 + R₄)- 1. C)R_annual=. D)R_annual= (1 + R₁)(1 + R₂)(1 + R₃)(1 + R₄).

Question

Quizplus · Accepted Answer

The formula for calculating the annual realised return when dividends are paid at the end of each quarter is to use the compounding formula. Therefore, the correct formula is (1 + R₁)(1 + R₂)(1 + R₃)(1 + R₄)- 1. This gives us the total return earned for the entire year, including the dividends paid.

If a Share Pays Dividends at the End of Each