The correct answer is: B. expected rate of return
The expected rate of return is the total return an investor expects to earn on an investment over a given period of time. It is calculated by adding the expected dividend yield to the expected growth rate.
The expected dividend yield is the percentage of the stock’s price that the company is expected to pay out in dividends each year. The expected growth rate is the percentage by which the company’s earnings are expected to grow each year.
For example, if a company’s stock price is $100, it pays a dividend of $5 per share, and its earnings are expected to grow by 10% per year, then the expected rate of return is 15%. This is calculated by adding the expected dividend yield of 5% to the expected growth rate of 10%.
The expected rate of return is an important factor to consider when making investment decisions. It is used to compare the returns of different investments and to determine whether an investment is worth making.
The other options are incorrect because:
- Dividend return is the total return an investor receives from a stock in the form of dividends. It is calculated by multiplying the dividend yield by the stock price.
- Expected capital is the amount of money an investor expects to invest in a particular asset.
- Invested capital is the amount of money an investor has actually invested in a particular asset.