The Average Squared Difference Between the Actual Return and the Average

question 28

Multiple Choice

The average squared difference between the actual return and the average return is called the

• A)excess return.
• B)variance.
• C)standard deviation.
• D)risk premium.
• E)volatility return.

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Definitions:

EBIT

stands for Earnings Before Interest and Taxes, a measure of a company's profitability that excludes interest and income tax expenses.

Financial Leverage

The use of borrowed capital or debt to increase the potential return of an investment, amplifying both gains and losses.

Capital Structures

The mixture of debt and equity financing a company uses to fund its operations and growth.

Industry Groups

Categories of related businesses that produce or sell similar products or services and share similar market characteristics.