Describe expected, required and realized return? Please list the sources of risk.

Expert Solution

Expected rate of return is the rate of return which will be calculated in Capital Asset pricing models and this is expected rate of return have been expected by investors after adjusting them with association with systematic risk.

Required rate of return is the minimum rate of return which the investor will be requiring for investment into a particular asset because required rate of return will be providing with the lowest possible rate of return which will be acceptable by the investor for investing into a particular security and it is also known as the hurdle rate.

Realised return is rate of return which has been booked out by the investor on his security so it is representation of the realised profits

Source of risk will include-

A. Change in the rate of inflation in the economy

B. Change in the monetary policy in the economy

C. Change in the demand and supply pattern in the economy

D. Change in the income levels and disposable income levels

E. Litigation issues with the company

F. Change in the corporate governance structure and management of the company

jeff jeffy answered 2 years ago

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