1. Understanding returns Aa Aa E The total return on an investment is the increase or decrease in the value of the investment relative to the cost of the investment. This return captures the income the investment generated as well as the capital gains or capital losses over a certain period of time There are two components of total return-the cash flow or income that the investment generates and the capital gain or loss If the price of an asset decreases by the end of the investment time, the investor is likely to make a O capital loss capital gain Based on your understanding of investment returns, complete the following equation by filling in the correct terms in the equation: Rate of Return- Amount Invested You gave $300 to your cousin at the start of the year. As a token of gratitude, your cousin gives you $480 at the end of the year instead of $300. If you look at this as an investment, what is your annual rate of return? 72.00% O-37.50% O 60.00% O 78.00% Which of the following investments generates a higher annual total percentage return? O A $1,000 return on a $10,000 investment after 10 years A $1,000 return on a $10,000 investment for 1 year