Please explain why this statement is (False). If a security's realized return is negative, it must have been true that the expected return was greater than the required return.
Please explain why this statement is (False). If a security's realized return is negative, it must have been true that the expected return was greater than the required return.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
Please explain why this statement is (False).
If a security's realized return is negative, it must have been true that the expected return was greater than the required return.
Expert Solution
Step 1
The realized return of the security is the return that the security has provided in the past.
The expected return of the security is the return that is calculated as the possible return in the future.
The required return is the return that is expected by the investor to consider investing in the security.
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