Weighted average of probabilities is classified as____________?
Correct answer: B. Expected rate of return
- A. Average rate of return
- B. Expected rate of return
- C. Past rate of return
- D. Weighted rate of return
Explanation
Expected rate of return is the probability-weighted average of possible returns. Each possible return is multiplied by its probability, and the resulting products are added together.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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