Question

A security has an expected rate of return of 0.10. What does this rate represent?

A) Dividend yield
B) Capital gain
C) Risk-free rate
D) Total return

Answer 1

The expected rate of return represents the average return that an investment is projected to generate over a certain period of time.

Step-by-step explanation:

The expected rate of return represents the average return that an investment is projected to generate over a certain period of time. It includes future interest payments, capital gains, and increased profitability. It is measured as a percentage and provides an estimation of the potential return for an investor.