- Explain why expected return is considered forward-looking. What challenges arise in using expected return?
- Explain how differences in allocations between the risk-free security and the market portfolio can determine the level of market risk. Use references to support your responses as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.
- Based on the probability and percentage of return for the three economic states in the table below, compute the expected return.

Economic State Probability Percentage of Return Fast Growth

60 Slow Growth

30 Recession

-23 2. If the risk-free rate is 7 percent and the risk premium is 4 percent, what is the...

estimating risk

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**Excerpt from file: **1. Explain why expected return is considered forward-looking. What challenges arise in using expected return? 2. Explain how differences in allocations between the risk-free security and the market portfolio can determine the level of market risk. Use references to support your responses as needed.

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