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Leona [35]
3 years ago
11

Suppose an investor is considering one of two investments that are identical in all respects except for risk. If the investor an

ticipates a fair return for the risk of the security he invests in, he can expect to _____.
Business
1 answer:
natali 33 [55]3 years ago
7 0

Answer:

The correct answer is letter "B": pay less for the security that has higher risk.

Explanation:

While investing, risk is a measure of how an asset can fluctuate providing profits or incurring losses. Risk investment tends to be associated with volatility which is how sensitive the asset is to respond to events that can make the asset price skyrocket or drop sharply.

<em>In case an investor believes his strategy will provide a fair return, he must be considering the net profit (gross profit minus initial investment) will be high enough. Besides the initial investment should have been purchased at the lowest price possible and the asset bought must represent the security with the highest risk at the moment of the purchase.</em>

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5 0
1 year ago
A provision stating that the insurer cannot dispute the validity of a policy after a specific period is called a(n) ______.
Mazyrski [523]

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8 0
2 years ago
A portfolio consists of $13,400 in Stock M and $18,900 invested in Stock N. The expected return on these stocks is 8.50 percent
Aneli [31]

Answer:

The expected return on the portfolio is:

10.31% ($3,331.40)

Explanation:

a) Data and Calculations:

Portfolio investments:  Expected Returns %   Expected Returns $

Stock M = $13,400           8.50%                           $1,139

Stock N = $18,900          11.60%                           $2,192.40

Total        $32,300          10.31%                           $3,331.40

Total expected returns in percentage is Expected Returns $/Total Investments * 100

= $3,331.40/$32,300 * 100

= 10.31%

b) The expected returns on the portfolio is derived by calculating the expected returns for each investment and summing up.  Then dividing the expected portfolio returns by the portfolio investment.  This yields 10.31% percentage value.

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3 years ago
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