LOS b: State the various forms of investment returns.
Q1. An investor buys a 6% coupon 5-year corporate bond priced to yield 7%. If rates remain unchanged when the investor sells the bond in 2 years, the investor will receive a:
A) capital loss.
B) total return equal to the coupon yield.
C) capital gain.
Q2. Which of the following is NOT a return on an investment?
A) Rate of discount.
B) Earnings.
C) Capital gains.
Q3. The returns on an investment are least likely to be measured by:
A) earnings per share.
B) coefficient of variation.
C) capital gains on an asset.
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