DEFINITION of 'Expected Return'
The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, if one invested in a stock that had a 50% chance of producing a 10% profit and a 50% chance of producing a 5% loss, the expected return would be 2.5% (0.5 * 0.1 + 0.5 * 0.05). It is important to note, however, that the expected return is usually based on historical data and is not guaranteed.
INVESTOPEDIA EXPLAINS 'Expected Return'
For the most part, the expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome  it is not a hard and fast figure of profit or loss. In the example above, for instance, the 2.5% expected return cannot, in fact, be realized  it is merely an average.
In addition to expected return, wise investors should also consider the probability of return in order to properly assess risk. After all, one can find instances in which certain lotteries offer a positive expected return, despite the very low probability of realizing that return.

Excess Returns
Investment returns from a security or portfolio that exceed a ... 
Actual Return
The actual gain or loss of an investor. This can be expressed ... 
Coefficient Of Variation  CV
A statistical measure of the dispersion of data points in a data ... 
Abnormal Return
A term used to describe the returns generated by a given security ... 
On Stream
An investment that is on track to earn its expected return. Stocks, ... 
Required Rate Of Return  RRR
The minimum annual percentage earned by an investment that will ...

What is the difference between stated annual return and effective annual return?
Essentially, the effective annual return accounts for intrayear compounding, and the stated annual return does not. The ... Read Full Answer >> 
What's the difference between absolute and relative return?
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