A

There are usually two versions of the same index:

- The price return takes into account only the capital gain on an investment. A
**price return index**reflects only the prices of the constituent securities. The income generated by the assets in the portfolio, in the form of interest and dividends, is ignored._{i}: the number of units of security i in the index portfolio.

P_{i}: the unit price of security i.

D: the value of the divisor. - The total return takes into account not only the capital appreciation on the portfolio, but also the income received. A
**total return index**reflects the prices and the reinvestment of all income received since the inception of the index.

The single-period price return of an index is the weighted average of the price returns of the individual securities:

or

Since the total return of an index includes price appreciation and income, we need to add the weighted average of income to the above formula to calculate the single-period total return:

or

The single-period returns should be linked geometrically.

Similarly, to calculate the total return over multiple periods: