Why is the percentage return a more useful measure than the dollar return?
Answer to relevant QuestionsHow do we define risk in this chapter and how do we measure it? You receive an investment newsletter advertisement in the mail. The letter claims that you should invest in a stock that has doubled the return of the S&P 500 Index over the last three months. It also claims that this stock ...Say you own 200 shares of Mattel and 100 shares of RadioShack. Would your portfolio return be different if you instead owned 100 shares of Mattel and 200 shares of RadioShack? Why? Assess the risk-return relationship of the bond market (Tables) during each decade since 1950. You have a portfolio with an asset allocation of 35 percent stocks, 55 percent long-term Treasury bonds, and 10 percent T-bills. Use these weights and the returns in Table 9.2 to compute the return of the portfolio in the ...
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