Supposing the return from an investment has the following probability distribution   Return   Probability     R (%)   8                 0.2   10               0.2   12               0.5   14               0.1   Required: What is the expected return of the investment? What is the risk as measured by the standard deviation of  expected returns?

Q: hich of the following would not be acceptable as a measure of basic investment risk? a)Expected…

A: Risk is always there when you invest in stock returns and risk is volatility of returns and change…

Q: How do an investment's required rate of return vary with perceived risk? Explain with an example?

A: Required rate of return refers to the rate which the investors expects from their investments. This…

Q: What is the formula to find an expected in returns in CAPM

A: In this question, we are required to determine the formula for expected return in Capital Asset…

Q: What is the relationship between correlation and the risk of the portfolio's rate of return? i.…

A: Correlation represents the degree of relationship between the movement of prices of assets in a…

Q: Define the term Risk-free real return?

A: Risk-free real return is a hypothetical number that mirrors the foreseen return on a venture that…

Q: Give a definition of a "return". Why do we need to incorporate risk into return (discount rate)?

A: Investment: An investment is when money is used now with the goal of increasing its value later. In…

Q: The desired rate of return on an investment should reflect the degree of risk involved. A.   True…

A: Riskier investments may give higher returns to the investors as they provide favorable ratio of risk…

Q: What is the expected return on a portfolio? How can the expected return on a portfolio be…

A: Expected Return on Portfolio  =( Weights of Stock 1 * Return of Stock 1) + ( Weights of Stock 2 *…

Q: The Capital Asset Pricing Model (CAPM) asserts that an asset’s expected return is equal to the…

A: Based on CAPM, Expected return on security = Risk free rate + Beta * Market risk premium

Q: When would I use the arithmetic average risk premium (as opposed to the geometric risk premium)?

A: The arithmetic average risk premium is calculated as the difference between the average return of an…

Q: Another name for the expected value of an investment would be: a. The mean value b. The risk-free…

A: The expected value (EV) is an anticipated value for investment at some point in the future. In…

Q: How would the risk premium work out for a riskier investment?

A: A risk premium is a return on venture over the hazard free rate a financial specialist requires to…

Q: Which is the best measure of risk for a single asset held in isolation, and which is the best…

A: For a single asset kept in isolation, the coefficient of variation shall be considered as the best…

Q: 1. The diversifiable risk of a portfolio: a. Is correlated with systematic risk. b. Can be made…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: The higher a security's risk, the higher the return investors demand, and thus the less they are…

A: Risk on security is defined as the risk of not getting actual return as per the expectations of the…

Q: Given the capital allocation line, an investor's optimal complete portfolio is the portfolio that A)…

A: Capital Allocation Line (or CAL) refers to that line in finance that shows risk and reward profile…

Q: What is the expected return on a portfolio? How can the expected return on a portfolio be…

A:

Q: The the expected return, the the risk. O a. lower; higher O b. higher,lower O c. higher; higher more…

A: Expected return and risk are correlated

Q: 4.32 Investment risk analysis. The risk of a portfolio of financial assets is sometimes called…

A: Expected loss with a probability distributon is calculated using the below formula: Expected…

Q: if asset A has lower volatility than asset B, then it contributes less to the overall volatility…

A: Volatility is change in expected rate of assets from the mean return and it shows the risk involved…

Q: The expected value and the standard deviation of returns for asset A is Asset A Possible Outcomes…

A: Expected value:Possible outcomes Probability (a)Returns % (b)Expected value…

Q: The expected value of an investment: Answer a. Is what the owner will receive when the investment is…

A: Expected Return refers to return anticipated by an investor while making investment. It may differ…

Q: Assume a utility function of ? = ?[?] − 1 ?? 2. Which statement(s) is/are correct about investors…

A: Investors make decisions based on their preferences and attitudes towards risk. The utility function…

Q: At a minimum, which of the following would you need to know to estimate the amount of additional…

A: A risk-free commodity is one that has a guaranteed future return and almost no chance of declining…

Q: Is it true that the the wider the risk premium, the lower the price of a expected future cash flow?

A: Risk premium is the return the stock gives over the risk free asset. risk premium = Rs-Rf Wider risk…

Q: Given the following probability distribution, what are the expected return and the standard…

A: The expected return is the return expected from the investment made. The expected return in this…

Q: When, if ever, will the geometric average return exceed the arithmetic average return for a given…

A: In finance the geometric average return is a way to figure out the rate of return, on an investment…

Q: A realized return is the rate of return actually earned on an investment. Group of answer choices…

A: Return: Return is defined as the money attained or lost on an investment through certain time…

Q: 1) Let us start with what is the difference between a real and a financial asset? 2) What is the…

A: Real assets and financial assets are two distinct types of assets owned by businesses and…