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Explain the Relationship Between an Expected Rate of Return on an Investment

question 54

Essay

Explain the relationship between an expected rate of return on an investment and the actual return that will actually occur.Explain the role expected return plays in investment decisions.


Definitions:

Criterion-related Validity

The extent to which a measure is related to an outcome or criterion, indicating the utility of the test for predicting performance or behavior.

Discriminant Validity

A method of demonstrating construct validity by correlating a test with other dissimilar instruments to ensure lack of a relationship.

Intelligence Test

Individual tests that assess a broad range of cognitive capabilities that generally results in an “IQ” score. Often used to identify mental retardation, giftedness, learning disabilities, and general cognitive functioning. It is a type of aptitude test.

Statistical Analysis

Involves mathematical techniques for collecting, reviewing, analyzing, and drawing conclusions from data.

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