Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

It has been suggested in this course that we should not rank investments by the expected return only. Why not? It is just the Expected

image text in transcribed
It has been suggested in this course that we should not rank investments by the expected return only. Why not? It is just the "Expected return" which is not necessarily the return you will actually get next year. I should not rank them according to "Expected return," because I have no idea how to calculated "Expected" returns. O "Expected Return" alone does not consider the risk of the investment There are too many other things to consider, like the nature of the company's business, and the liklihood of bankruptcy, O "Expected return" is simply a "made up" statistic. All of these are valid reasons why you should not rank based solely upon Expected Return

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental Accounting Principles

Authors: John J Wild, Ken Shaw

24th edition

1259916960, 978-1259916960

Students also viewed these Finance questions