A Canadian investor holds units in a publicly traded Real Estate Investment Trust (REIT) that owns a diversified portfolio of office buildings in major Canadian cities. Over the past year, the REIT units have depreciated by 8%, but the REIT distributed $0.75 per unit in dividends, and the unit price initially was $15. What is the total return for the investor over this period, excluding taxes and trading costs?

Question: A Canadian investor holds units in a publicly traded Real Estate Investment Trust (REIT) that owns a diversified portfolio of office buildings in major Canadian cities. Over the past year, the REIT units have depreciated by 8%, but the REIT distributed $0.75 per unit in dividends, and the unit price initially was $15. What is the total return for the investor over this period, excluding taxes and trading costs?

Answer options:

• -3.0%
• 2.0% ✅ 3.0%
• 5.0%

Correct answer: 3.0%

Explanation: The capital loss is 8% of $15 = $1.20. The dividend yield is $0.75 / $15 = 5%. The ending price is $15 - $1.20 = $13.80. Total return = (Ending Price - Beginning Price + Dividends) / Beginning Price = ($13.80 - $15 + $0.75) / $15 = (-$0.45) / $15 = -3.0%. For clarity in return calculation where yield is given separately: -8% (capital return) + (0.75/15) (dividend yield) = -8% + 5% = -3.0%.