Rate of Return

Rate of Return

Explain the differences between historical and expected rates of return

Knowledge of a stocks historic activity or ex-post can assist an analyst in determining the expected return and risk averages. The variability of a stocks returns in relation to there average us measured by the stocks historical risk. Selected quantitive measures of this variability are the standard deviation, variance, and coefficient variation. All of these measures use different variations of periodic returns from the average return. Multiplying the rate of the return respectively on each single asset will result in the expected rate of return for one stock.

What is variance and standard deviation? Selected quantative measures of variability include...