... return on his or her portfolio, and the portfolio’s risk Logically, then, the risk and return of an individual security should be analyzed in terms of how that security affects the risk and return. .. Probability of Occurrence 0.4 0.3 0.3 0.2 0.2 0.1 0.1 15 100 Rate of Return (%) 10 15 20 Rate of Return (%) Expected Rate of Return Expected Rate of Return in between Suppose we had the time and patience... rate of return is the most common measure of investment performance SELF-TEST QUESTIONS Differentiate between dollar return and rate of return Why is the rate of return superior to the dollar return