Abnormal Returns Differ from Expected Returns.

. Returns that differ from what is expected are either positive or negative. How is standard deviation defined in relation to investments? The standard deviation of a mutual fund is a measure of the fund's volatility, or how much its returns fluctuate over time. It is calculated using the historical return data of the fund.

The higher the standard deviation, the more volatile the fund is. This means that its returns are more likely to differ from its average return, and it is more risky.

Investors who are risk-averse may prefer to invest in funds with lower standard deviations, while investors who are willing to take on more risk may prefer funds with higher standard deviations. What are the two basic types of return on an investment? The two basic types of return on an investment are capital gains and dividends. Capital gains are profits realized when an investment is sold for more than the original purchase price. Dividends are payments made by a company to shareholders, typically as a percentage of the company's profits. Is abnormal return the same as alpha? No, abnormal return is not the same as alpha. Abnormal return is the return of a security or portfolio that is above or below the expected return. Alpha is a measure of the risk-adjusted performance of an investment.

What refers to difference between expected return and actual return?

The expected return is the average return that a mutual fund is expected to generate over time. The actual return is the actual return that a fund generates over a specific period of time. There will always be a difference between the expected return and the actual return, because the market is never certain. The expected return is simply an average of what the fund has generated in the past, while the actual return is what the fund actually generates in the present.

What are the types of return?

There are three main types of return for mutual funds: capital gains, dividends, and distributions.

Capital gains are profits that result from the sale of a security for more than the purchase price. For example, if you buy a mutual fund for $10 per share and it increases in value to $12 per share, you have made a capital gain of $2 per share.

Dividends are payments made by a company to its shareholders out of its profits. For example, if a mutual fund holds shares in a company that pays a dividend of $1 per share, the mutual fund will pass on that dividend to its shareholders.

Distributions are payments made by a mutual fund to its shareholders out of its capital gains and profits. For example, if a mutual fund has made a capital gain of $2 per share and a profit of $1 per share, it may distribute $0.50 per share to its shareholders.