The Reasons for choosing the best alternative. Introduction : Expected Return is a process of estimating the profits and losses an investor earns through the expected rate of returns. Beta and market return are some factors that are associated to estimate the expected return. Standard deviation is apportioned of distribution of a collection of figures from its mean.

Question

Want to see the full answer?

Answer 1

Question

Chapter 11, Problem 2MC

Summary Introduction

To determine: The Reasons for choosing the best alternative.

Introduction: Expected Return is a process of estimating the profits and losses an investor earns through the expected rate of returns. Beta and market return are some factors that are associated to estimate the expected return. Standard deviation is apportioned of distribution of a collection of figures from its mean.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Students have asked these similar questions

During an interview with her investment adviser, a retired investor made the following two statements:a. “I have been very pleased with the returns I’ve earned on Petrie stock over the past two years and I am certain that it will be a superior performer in the future.”b. “I am pleased with the returns from the Petrie stock because I have specific uses for that money. For that reason, I certainly want my retirement fund to continue owning the Petrie stock.”Identify which principle of behavioral finance is most consistent with each of the investor’s two statements.

Sara is currently holding 75 shares of Apple, Inc. (AAPL), 16 shares of PayPal (PYPL), and 62 shares of DraftKings Inc. (DKNG) in her secret portfolio. To purchase fancy Christmas gifts, she is planning to short the 70 shares of AAPL and 16 shares of PYPL. As a result of this action, Sara’s portfolio would A. reduce the free cash flows. B. increase the volatility of returns. C. reduce the probability of high returns. D. increase the expected rate of return. Clear my choice

You are a portfolio manager of a prestigious Investment Management company, and two of your clients have reached you to share their thoughts about their portfolio performances: • Mathew: “Hello, I have lost a lot of money in the last two quarters! I know that I asked you to invest my money into a very aggressive mutual fund even though you said that it did not fit my investor profile. I know, I know, but I now need to recover. I want you to move my money from this aggressive mutual fund to a technology fund that has done excellent in the last year. Thus, the potential return from this fund is higher, and I think that I can recover from my losses.” • Carol: “I wanted to thank you for the extraordinary performance of my portfolio in the last few quarters. I think that this situation will not continue in the future, however. Six consecutive quarters of gain? Come on, a loss is overdue, you know? Should I move my money elsewhere? Or, if we keep the money in this portfolio, don’t you think…