Which of the following is the difference between an expected return and actual return on an investment?
Click on the arrows to vote for the correct answer
A. B. C. D.D
The correct answer is A. Expected return.
Expected return is the return that an investor anticipates receiving from an investment based on its projected performance. It is typically calculated using historical data, financial analysis, and other metrics such as market trends, economic conditions, and interest rates. Expected return is a forward-looking estimate that helps investors assess the potential profitability of an investment.
Actual return, on the other hand, is the return an investor actually receives from an investment after all factors have been taken into account. Actual return is calculated by subtracting the initial investment from the final value of the investment, taking into account any dividends, interest, or capital gains or losses. Actual return reflects the real-world performance of the investment and can be affected by a variety of factors, including market volatility, inflation, taxes, and fees.
The difference between expected return and actual return is that expected return is a projection or estimation of what the return on an investment is likely to be, while actual return is the realized return that an investor actually experiences. The difference between the two can be significant, and it is important for investors to regularly review their investments and adjust their expectations accordingly.
In summary, expected return is the anticipated return on an investment, while actual return is the realized return after all factors have been taken into account. The difference between the two is an important factor for investors to consider when evaluating the performance of their investments.