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1) Which of the below is not required to compute an investment return? Multiple Choice Interest...

1) Which of the below is not required to compute an investment return?

Multiple Choice

  • Interest rate

  • Price of the asset at purchase

  • Price of the asset at sale

  • Distributed income

2) Calculate the nominal percent return from an investment of $300 in a share whose price increases to $375 after a year.

Multiple Choice

  • 75%

  • 20%

  • 25%

  • 16.67%

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Answer #1

Q1. An investment return is computed using the purchase price and salvage value of an asset as well as the distribution of income generated from the asset. The investment return is also know as the rate of return. Interest rate is not required to calculate the rate of return.

Ans: Interest rate

Q2. Investment cost= $300

Value after 1 year = $375

Increase in the value of investment in 1 year = $375 - $300 = $75

Nominal rate of return = (Increase in the value of investment/Investment cost) * 100 = ($75/$300) * 100 = 25%

Ans: 25%

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