Portfolio Theory
Required Return
Definition
What is Required Return?
The minimum expected return an investor demands for the time and risk involved.
Example in practice
How This Looks in Practice
A project is rejected because its expected 12% return is below the 16% required return.
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Related Terms
Portfolio Theory
Capital Asset Pricing Model
A model linking expected return to the risk-free rate, market risk premium, and an asset's beta.
Portfolio TheorySecurity Market Line
A line showing the CAPM relationship between expected return and beta.
Portfolio TheoryEfficient Frontier
The set of portfolios offering the highest expected return for each level of risk under stated assumptions.
Fraud & ScamsPonzi Scheme
A fraud that pays earlier participants using money from newer participants rather than genuine investment profits.