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Define the Return on Total Assets and Explain How It

question 74

Essay

Define the return on total assets and explain how it is used to measure a company's financial performance.


Definitions:

Capital Asset Pricing Model

A framework that explains the link between the inherent risk and anticipated return on assets, especially equities.

Efficient Frontier

A portfolio optimization concept that outlines the set of optimal portfolios offering the highest expected return for a defined level of risk or the lowest risk for a given level of expected return.

Correlation

A statistical measure that describes the extent to which two variables move in relation to each other, ranging from -1 (perfect negative correlation) to +1 (perfect positive correlation).

Portfolio Weight

The proportion of the total value of an investment portfolio that is attributed to each individual investment.

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