LOMA 357 MODULE 2 VERIFIED STUDY GUIDE
Realized appreciation - Answers - Investment gain if the asset is sold
Unrealized appreciation - Answers - Investment gain while the investor continues to
hold the asset
Rate of Return - Answers - Investment earning expressed as a percentage of the
invested principal.
Nominal Return - Answers - A stated rate of return on an investment without adjustment
for inflation or other factors.
Total Return - Answers - The sum of all returns from the investment over a given time
period, typically 1 year.
Historical Return - Answers - A known investment performance result.
Expected Return - Answers - Generally, the total amount or annual rate of return an
investor expects an investment to earn, given market forces affecting the investment.
Required Return - Answers - The annual rate of investment return an investor requires
as reasonable compensation for a given level of risk and to satisfy the investor's
objectives.
Inflation - Answers - This erodes the purchasing power of money in an economy
Risk Premium - Answers - A portion of the investment compensation that investors
expect to earn in excess of the risk-free rate and inflation.
Real Rate of Return - Answers - The rate of return on an investment after adjustment for
inflation and potentially some other systematic effects.
Volatility - Answers - Refers to the tendency for an investment's market price, or
potentially other aspects of market value, such as bond yield, to change over a specified
period of time.
Standard Deviation - Answers - Measures the dispersion of a data set from its mean.
Specific Risks - Answers - Risks that can be substantially reduced by diversification.
Systemic Risks - Answers - A series of adverse events occurring in significant number
of financial institutions or markets that cannot be reduced by diversification.
Realized appreciation - Answers - Investment gain if the asset is sold
Unrealized appreciation - Answers - Investment gain while the investor continues to
hold the asset
Rate of Return - Answers - Investment earning expressed as a percentage of the
invested principal.
Nominal Return - Answers - A stated rate of return on an investment without adjustment
for inflation or other factors.
Total Return - Answers - The sum of all returns from the investment over a given time
period, typically 1 year.
Historical Return - Answers - A known investment performance result.
Expected Return - Answers - Generally, the total amount or annual rate of return an
investor expects an investment to earn, given market forces affecting the investment.
Required Return - Answers - The annual rate of investment return an investor requires
as reasonable compensation for a given level of risk and to satisfy the investor's
objectives.
Inflation - Answers - This erodes the purchasing power of money in an economy
Risk Premium - Answers - A portion of the investment compensation that investors
expect to earn in excess of the risk-free rate and inflation.
Real Rate of Return - Answers - The rate of return on an investment after adjustment for
inflation and potentially some other systematic effects.
Volatility - Answers - Refers to the tendency for an investment's market price, or
potentially other aspects of market value, such as bond yield, to change over a specified
period of time.
Standard Deviation - Answers - Measures the dispersion of a data set from its mean.
Specific Risks - Answers - Risks that can be substantially reduced by diversification.
Systemic Risks - Answers - A series of adverse events occurring in significant number
of financial institutions or markets that cannot be reduced by diversification.
