Along with the greater risk goes a slightly higher expected return (not counting fund expenses).
Modern portfolio theory advocates blending asset classes to maximize expected return and minimize portfolio volatility.
They're valued on total expected return, just the way Wall Street treats bond portfolios.
And because they have zero expected return, they are inferior to the rate of risk-free return.
With the junkier and longer-term bonds you get higher expected return but also higher risk.
Or there is no investment with a lower standard deviation for the same expected return.
The higher the beta, the higher the risk and the higher the expected return.
The concept is that different portfolios with different levels of risk and expected return are offered.
Your expected return with a large, random portfolio is identical to the return on the index.
Rational investors will always prefer the lowest risk approach to achieving any particular expected return.
When building an app, the biggest question for a CEO is the expected Return on Investment (ROI).
FORBES: The App-titude Test: Is Creating a Mobile App Right For You?
Or did more workers than expected return to its production lines after the Lunar New Year break?
When capital gains taxes are lower, the expected return on capital is higher and stimulates more investment activity.
FORBES: Capital Gains Tax is an Economic Monkey Wrench (2012)
The second criterion for asset class inclusion is that the expected return must be higher than the inflation rate.
But even if asset returns are estimated accurately, the high expected return reflects the greater risk inherent in equity investments.
At equilibrium, all its investments will yield the same expected return, equal to the lending interest rate in non-Islamic banking.
Since European, Asian and U.S. economies are somewhat detached, you can gain in safety by adding foreign stocks without sacrificing expected return.
When the perceived risk of an asset class is low, the expected return is also low relative to more risky asset classes.
This is because the cost of borrowing to the tax-payer is just another way of saying the expected return to the investor.
First, gold has an expected return that is little more than inflation.
You could diversify away all that extra risk without compromising expected return.
The standard portfolio rule says that your stock percentage should rise with the expected return (stocks and bonds) divided by squared return volatility.
Understand your current portfolio, i.e. what is the expected return, what is the level of risk and what is the level of diversification.
Harley raised the pension plan's expected return on assets from an already optimistic 10.3% in 1999 to 10.5% in both 2000 and 2001.
Additionally, stocks are priced so that the expected return of any stock is identical to all others of its size and growth characteristics.
The yield on the 30 year bond is 4% currently, substantially below the 6%-8% expected return projected by most private and public pension funds.
The expected return is not stellar, but if it is safety and return that the average investor seeks, then Cisco seems a good candidate.
The GAO study found that the DCoE failed to define and articulate its strategic plan, goals, budget projections and the expected return on the investment.
Whether calls in fact damage you depends on unpredictable events, but in probabilistic terms callability usually slices at least a quarter-point off your expected return.
But the idea that it increases your expected return is balderdash.
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