What does the total rate of return measure?

The total rate of return provides a comprehensive measure of an investor's performance by accounting for both the capital gains and any income generated by investments, such as dividends or interest. This measurement reflects the overall increase in the investor's wealth attributable to their investment activities. By considering all sources of returns, the total rate of return offers a complete picture of how an investment has performed over a given period.

This encompassing approach allows investors to evaluate the effectiveness of their investment strategy in generating wealth, as it incorporates the appreciation in value (capital gains) and the income generated from those investments. Thus, option C accurately describes the total rate of return as it captures the full impact both income and price changes have on wealth accumulation.