Forums
Back
Investment
Economics
Sir option c is answer for this question . But option A also seems to be right. Please give clarity
Answers (2)
I understand the confusion! While "Dividend" is a type of return, "Yield" is the more accurate technical definition of "Return on Investment" (ROI) in a general sense.Here is the breakdown to clarify:Why Option (c) Yield is the best answer:Definition: Yield is the percentage return on an investment over a specific period. It is the standard metric used to measure how much income an investment generates relative to its cost.Inclusivity: "Yield" covers all types of returns. It can represent dividends from stocks, interest from bonds, or rent from real estate.Why Option (a) Dividend is limited:Specificity: A dividend is specifically the distribution of a portion of a company's earnings to shareholders.Narrow Scope: It only applies to equity (stocks). If you invest in a bond, your return is "Interest," not a "Dividend." Therefore, it doesn't represent "Return on Investment" as a whole category.SummaryThink of it this way:Dividend and Interest are the forms the money takes.Yield is the measure of that return relative to what you paid.Since the question asks for the general term for ROI, Yield is the most comprehensive choice.
Harish.s
I understand the confusion! While "Dividend" is a type of return, "Yield" is the more accurate technical definition of "Return on Investment" (ROI) in a general sense.Here is the breakdown to clarify:Why Option (c) Yield is the best answer:Definition: Yield is the percentage return on an investment over a specific period. It is the standard metric used to measure how much income an investment generates relative to its cost.Inclusivity: "Yield" covers all types of returns. It can represent dividends from stocks, interest from bonds, or rent from real estate.Why Option (a) Dividend is limited:Specificity: A dividend is specifically the distribution of a portion of a company's earnings to shareholders.Narrow Scope: It only applies to equity (stocks). If you invest in a bond, your return is "Interest," not a "Dividend." Therefore, it doesn't represent "Return on Investment" as a whole category.SummaryThink of it this way:Dividend and Interest are the forms the money takes.Yield is the measure of that return relative to what you paid.Since the question asks for the general term for ROI, Yield is the most comprehensive choice.
If you make an investment and you generate a profit - entire profit is return dividend is distributed profit - only a portion of total profit hence dividend is not correct answer
Your Reply