The Expected Return on a Stock Computed Using Economic Probabilities

question 26

Multiple Choice

The expected return on a stock computed using economic probabilities is:

• A) guaranteed to equal the actual average return on the stock for the next five years.
• B) guaranteed to be the minimal rate of return on the stock over the next two years.
• C) guaranteed to equal the actual return for the immediate twelve month period.
• D) a mathematical expectation based on a weighted average and not an actual anticipated outcome.
• E) the actual return you should anticipate as long as the economic forecast remains constant.

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Definitions:

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Profitable

The state of yielding financial gain or benefit, where the income generated from business activities exceeds the expenses, costs, and taxes involved in sustaining the activity.

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