Understanding Return

Chapter: 6 Understanding Return

Section: 6 Market Return

It is possible to calculate the appreciation or decline in the overall market value. This could be used as a good benchmark for investors who have a portfolio of investment in various sectors.

 

To compute the market return all you require is market index or market capitalization statistics at the beginning of the year and at the end of the year and the dividend yield of the market.

 

The following formula could be used to calculate the market return:

 

Overall market return(%) =

End of year index value – Beginning of year index value

x 100

Beginning of year index value

+

Total dividend paid by the joint stock companies

Current market capitalization of stock market

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