What are the two components of risky return (U) in the total return equation?Multiple select question.expected riskexpected returnunsystematic riskmarket risk

Components of Risky Return (U)

In the context of the total return equation, the two components of risky return (U) are:

1. Unsystematic Risk: This refers to the risk that is unique to a particular company or industry. It's the portion of risk that is diversifiable, meaning that investors can reduce this risk through diversification by holding a variety of assets.

2. Market Risk: Also known as systematic risk, this type of risk affects all companies and cannot be diversified away. Market risk is associated with broader economic factors such as changes in interest rates, inflation, and political instability.

Summary

To summarize, the correct components of risky return (U) in the total return equation are unsystematic risk and market risk. The other options, expected risk and expected return, do not represent the components of risky return in this context.