What follows the term “total return” when evaluating an investment?

Total return is a comprehensive measure used to evaluate the overall performance of an investment. It encompasses not just the increase in the value of the investment, known as capital appreciation, but also any income generated from the investment, such as dividends or interest payments.

Choosing the combination of dividends and capital appreciation accurately reflects the true performance of an investment because it takes into account both the growth in the value of the asset and any cash flows received by the investor. This holistic view is crucial for making informed decisions, as it allows investors to see the full picture of their returns, rather than focusing solely on one aspect.

This understanding highlights the importance of recognizing all forms of returns in investment evaluations, which is why the option representing both dividends and capital appreciation is the correct choice.