The required rate of return is intended to provide

Question

Quizplus · Accepted Answer

The required rate of return serves all of the purposes listed in the answer choices. A compensation for expected inflation is necessary to ensure that the investor's purchasing power is not eroded. A premium for risk assumed is necessary because higher risk investments should offer higher potential returns to compensate for the additional risk. A minimum real rate of return is necessary to ensure that the investor is being adequately rewarded for deferring consumption and investing their money.

The Required Rate of Return Is Intended to Provide