SIE Understanding Trading, Customer Accounts and Prohibited Activities Question 36: Answer and Explanation

Question: 36

Investment return is calculated in which of the following ways?

• A. The difference between the sales proceeds and the purchase price
• B. Cash received while the security is held
• C. The excess of net cash received over what was expected
• D. Cash received while the security is held, plus the difference between the sales proceeds and the purchase price, less any commissions, adviser fees, custody fees and recordkeeping costs, less income tax

Correct Answer: D

Explanation:

D: Choice D is correct because these components are all considered in the calculation of the investment return. Choices A and B are incorrect as they are only some of the components of investment return. Choice C is incorrect as it is suggesting how to compare the return with some other benchmark.