Maximum return criterion
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Maximum return criterion (MRC)
Standard that one choose the asset with the highest return.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.
Maximum Return Criterion
The principle of seeking the highest possible return. More specifically, the MRC states that an investor, when presented with plans having different returns at a given risk, will choose the plan with the highest return. While not all researchers believe that all investors use the MRC even unconsciously, many defend it as holding "approximately" in a given situation. See also: Homogenous expectations assumption.
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