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Ch13 Student: Multiple Choice Questions 1. The return on a risky asset which is anticipated being earned in the future is called the return. A. B. C. D. E. average historical expected geometric required.

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The systematic risk principle states: The expected return on an asset depends only on its systematic risk. So, no matter how much total risk an asset has, only the systematic portion is relevant in determining the expected return (and the risk premium) on that asset.

An expected return and a standard deviation are two statistical measures that investors can use to analyze their portfolios. The expected return is the anticipated amount of returns that a portfolio may generate, whereas the standard deviation of a portfolio measures the amount that the returns deviate from its mean.

Calculating Expected Return of a Portfolio The expected return for an investment portfolio is the weighted average of the expected return of each of its components. Components are weighted by the percentage of the portfolio's total value that each accounts for.

The systematic risk principle states: The expected return on an asset depends only on its systematic risk. So, no matter how much total risk an asset has, only the systematic portion is relevant in determining the expected return (and the risk premium) on that asset.

What is an uncertain or risky return? it is the portion of return that depends on information that is currently unknown. What is the definition of expected return? it is the return that an investor expects to earn on a risky asset in the future.

An expected return is calculated by multiplying potential outcomes by the odds of them occurring and then totaling these results. Expected returns cannot be guaranteed. The expected return for a portfolio containing multiple investments is the weighted average of the expected return of each of the investments.

Expected return = (Return A x probability A) + (Return B x probability B) Expected return is just one of many potential returns since the investment market is highly volatile. You can calculate expected return as a weighted average outcome since it accounts for the investment's historical performance.

Risk refers to the possibility of the actual return varying from the expected return, ie the actual return may be 30% or 10% as opposed to the expected return of 20%. The risk-free return is the return required by investors to compensate them for investing in a risk-free investment.

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Form Packages
Adoption
Bankruptcy
Contractors
Divorce
Home Sales
Employment
Identity Theft
Incorporation
Landlord Tenant
Living Trust
Name Change
Personal Planning
Small Business
Wills & Estates
Packages A-Z
Form Categories
Affidavits
Bankruptcy
Bill of Sale
Corporate - LLC
Divorce
Employment
Identity Theft
Internet Technology
Landlord Tenant
Living Wills
Name Change
Power of Attorney
Real Estate
Small Estates
Wills
All Forms
Forms A-Z
Form Library
Customer Service
Terms of Service
DMCA Policy
About Us
Blog
Affiliates
Contact Us
Privacy Notice
Delete My Account
Site Map
Industries
Forms in Spanish
Localized Forms
State-specific Forms
Forms Kit
Legal Guides
Real Estate Handbook
All Guides
Prepared for You
Notarize
Incorporation services
Our Customers
For Consumers
For Small Business
For Attorneys
Our Sites
US Legal Forms
USLegal
FormsPass
pdfFiller
signNow
airSlate workflows
DocHub
Instapage
Social Media
Call us now toll free:
1-877-389-0141
As seen in:
  • USA Today logo picture
  • CBC News logo picture
  • LA Times logo picture
  • The Washington Post logo picture
  • AP logo picture
  • Forbes logo picture
© Copyright 1997-2025
airSlate Legal Forms, Inc.
3720 Flowood Dr, Flowood, Mississippi 39232