with an expected rate of return of 10% and a default risk of 20% over the portfolio life with an expected rate of return of 10% and a default risk of 20% over the portfolio life
A return in finance is a profit on an investment. It includes any change in the investment's value and/or cash flows received by the investor, such as interest payments, coupons, cash dividends, stock dividends, or the payoff from a derivative or structured product.
The annual rate of return is the percentage change in an investment's value. For instance, if you assume a 10% annual rate of return, you are anticipating that the value of your investment will rise by 10% each year.
Assume an investor paid $950 for a short-term bond, such as a US Treasury Bill, and redeemed it at maturity for its face value of $1000.
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