An Asset's Return on Investment Has Two Components, One of Which

question 72

Multiple Choice

An asset's return on investment has two components, one of which is ____________, which reflects the cash you receive directly while you own the investment.

• A) the capital gain
• B) the income component
• C) your reward for bearing risk
• D) your total dollar return
• E) your gross return on that investment

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Definitions:

Poisson Process

A statistical process that models the occurrence of a certain number of events within a fixed interval of time or space, with these events happening at a constant mean rate and independently of the time since the last event.

Probability

A numerical measure of the likelihood of a particular event occurring, expressed on a scale from 0 to 1.

Poisson Arrivals

A process that describes the probability of a given number of events happening in a fixed interval of time or space, assuming these events occur with a known constant mean rate and independently of the time since the last event.

Average Number

A value obtained by dividing the sum of all quantities in a dataset by the number of quantities in that dataset, commonly known as the mean.