Above-average returns are
A) higher profits than the firm earned last year.
B) higher profits than the industry averaged over the last 10 years.
C) profits in excess of what an investor expects to earn from a historical pattern of performance of the firm.
D) profits in excess of what an investor expects to earn from other investments with a similar level of risk.

Question

Quizplus · Accepted Answer

Above-average returns refer to profits that are higher than what an investor would expect to earn from other investments with a similar level of risk. This means that the returns are not just higher than the firm's historical performance or industry averages but exceed the investor's expectations based on comparable investments. Additionally, options A and B are more focused on internal factors of the firm, while option C is more focused on past performance rather than expected future returns.

Above-Average Returns Are