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Which of the following is NOT a component of risk-return analysis?a.Assessing the potential risks of an investmentb.Evaluating the potential returns of an investmentc.Calculating the average market returnd.Analyzing the historical performance of similar investments

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Which of the following is NOT a component of risk-return analysis?a.Assessing the potential risks of an investmentb.Evaluating the potential returns of an investmentc.Calculating the average market returnd.Analyzing the historical performance of similar investments

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Solution

The option that is NOT a component of risk-return analysis is c. Calculating the average market return. While this can be useful information, it is not directly part of risk-return analysis. Risk-return analysis focuses on the potential risks and returns of a specific investment, not the market as a whole.

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