Which one of the following statements is correct? Over time, the average unexpec
ID: 2734291 • Letter: W
Question
Which one of the following statements is correct?
Over time, the average unexpected return will be zero.
The expected return minus the unexpected return is equal to the total return.
The unexpected return is always negative.
Over time, the average return is equal to the unexpected return.
The expected return includes the surprise portion of news announcements.
Over time, the average unexpected return will be zero.
The expected return minus the unexpected return is equal to the total return.
The unexpected return is always negative.
Over time, the average return is equal to the unexpected return.
The expected return includes the surprise portion of news announcements.
Explanation / Answer
Over time, the average unexpected return will be zero.
R = E(R) + U
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