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 is calculated by compounding the quarterly returns using the formula (1 + R1) x (1 + R2) x (1 + R3) x (1 + R4) - 1, where R1, R2, R3, and R4 are the quarterly returns. Therefore, the correct choice is A.

If a Stock Pays Dividends at the End of Each