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Expected Rate of Return
The anticipated amount of profit or loss an investment generates, expressed as a percentage of the initial investment amount.
Covariance
A measure of the degree to which returns on two risky assets move in tandem. A positive covariance means that asset returns move together. A negative covariance means they vary inversely.
Variance
A measure of the dispersion of a random variable. Equals the expected value of the squared deviation from the mean.
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