Author Question: The holding period return (HPR) is the return measured from the initial purchase to the final sale ... (Read 102 times)

Alainaaa8 · **on:** Jul 10, 2018

The holding period return (HPR) is the return measured from the initial purchase to the final sale of the investment without regard to the length of time the investment is held.

Indicate whether the statement is true or false.

Question 2

Finance functions in a two-parameter world of risk and return. Define risk and return in a financial sense and discuss how these two concepts are joined at the hip.

What will be an ideal response?

enass · **Reply #1 on:** Jul 10, 2018

Answer to Question 1

Answer: TRUE

Answer to Question 2

Answer: Investors desire to maximize return and minimize risk. Or put another way, they want to get the most out of their investments with the least amount of uncertainty. However, there is a direct trade-off between risk and expected return. In order for investors to increase their expected return, they must be willing to bear greater risk or uncertainty. You cannot have one without the other; thus risk and return are joined at the hip, so to speak.