Mathematical finance, Financial risk, Capital

1. Identify the components of a stocks realized return. A stocks realized return is represented by the overall gain an investor obtains from an investment. The reason people invest in common stocks is to make money. The primary components of a stocks realized return are capital gains and dividends paid out to the investor. The dividends an investor might receive could be either a cash dividend or a stock dividend. To calculate the stock realized return you have to add the capital gain obtained at the moment of sale and the total dividends received while the investor held the common stock. The addition of these two variables would then be divided by the original price the investor paid for the stock or lot of stocks. This calculation would give the gross return. The net return is