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:

Commerce Clause

The Commerce Clause is a provision in the U.S. Constitution granting Congress the power to regulate trade and commerce among the states, with foreign nations, and with Native American tribes.

Federal Government

The governing body of a nation, state, or community that operates at the national level, making and enforcing laws over a certain territory.

Judicial Review

The power of courts to assess the constitutionality of legislative acts or government actions.

U.S. Constitution

The supreme law of the United States, establishing the framework of the national government and the rights of the citizens.