Which of the following best explains when value is created?
A) When the return on an investment is less than is required for that risk class
B) When the return on an investment is greater than is required for average investments
C) When the expected return on an investment is greater than is required for that risk class
D) When the risk level on an investment is higher than is required for that return

Question

Quizplus · Accepted Answer

Value is created when the expected return on an investment is greater than is required for its particular risk level. This means the investment is generating excess returns, providing a higher-than-average return for the amount of risk taken.

Which of the Following Best Explains When Value Is Created