When calculating your return on investment you should ignore:A) paper gains. B) losses you avoided by not buying a stock that has since decreased in price. C) dividends that have been declared on a stock you own if you have not yet received the dividend. D) paper capital losses. E) fees you are charged in the process of purchasing a security.

Question

Business

Amy Miller

3 December, 06:47

When calculating your return on investment you should ignore:A) paper gains. B) losses you avoided by not buying a stock that has since decreased in price. C) dividends that have been declared on a stock you own if you have not yet received the dividend. D) paper capital losses. E) fees you are charged in the process of purchasing a security.

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Answers (1)

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Melany Castaneda · Answer 1

B) losses you avoided by not buying a stock that has since decreased in price

Explanation:

If a stock has not been bought, there has not been a transaction involving that particular stock. Even though, in theory, you may have avoided losses by not buying a stock that has decreased in price, there hasn't been any actual gain or loss on investment related to that stock since there was no investment.

Since all other alternatives present valid parameters when calculating return on investment, the answer is B).