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scZoUnD [109]
3 years ago
14

There are two ways to calculate the expected return of a​ portfolio: Either calculate the expected return using the value and di

vidend stream of the portfolio as a​ whole, or calculate the weighted average of the expected returns of the individual stocks that make up the portfolio. Which return is​ higher? ​(Select the best choice​ below.) A. The weighted average expected return of the individual stocks is higher because returns are concave. B. Impossible to​ tell, it depends on the portfolio. C. Neitherboth calculations give the same answer. D. The weighted average expected return of the individual stocks is higher because returns are convex.
Business
1 answer:
Arisa [49]3 years ago
8 0

Answer:

Correct Answer:

C. Neither, both calculations give the same answer.

Explanation:

In any given business calculation that is expected to arrive at a particular solution, the solution obtained would always be the same irrespective of the method adopted. <em>For the example, the case of expected return of a portfolio in a business, the calculation would definitely give the same answer when two methods are adopted.</em>

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