Asked by Lisdrey Cires on Jul 15, 2024
Verified
Which one of the following statements is correct?
A) The unexpected return is always negative.
B) The expected return minus the unexpected return is equal to the total return.
C) Over time, the average return is equal to the unexpected return.
D) The expected return includes the surprise portion of news announcements.
E) Over time, the average unexpected return will be zero.
Unexpected Return
The difference between the actual return of an investment and the expected return, usually arising from unexpected factors or events.
Expected Return
The anticipated return on an investment, accounting for the probabilities of different outcomes, including gains and losses.
Total Return
The overall financial benefit (or loss) of an investment over a specified period, including both capital gains and dividends.
- Understand the relationship between an asset's expected return and its systematic risk.
Verified Answer
Learning Objectives
- Understand the relationship between an asset's expected return and its systematic risk.
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