The Expected Return on a Portfolio

question 107

Multiple Choice

The expected return on a portfolio:

• A)can be greater than the expected return on the best performing security in the portfolio.
• B)can be less than the expected return on the worst performing security in the portfolio.
• C)is independent of the performance of the overall economy.
• D)is limited by the returns on the individual securities within the portfolio.
• E)is an arithmetic average of the returns of the individual securities when the weights of those securities are unequal.

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Definitions:

Annual Dividend

The total dividend payment a shareholder receives from a company or investment fund in one year.

Total Dollar Return

The overall financial benefit received from an investment, considering both capital gains and income such as dividends or interest.

Shares

Units of ownership interest in a corporation or financial asset that provides for an equal distribution in any profits, if any are declared, in the form of dividends.

Large Company Stocks

Shares issued by corporations with a large market capitalization, often considered less risky investments.