What is 'Expected Return'
Expected return is 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.
BREAKING DOWN '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.

Mean Return
1. In securities analysis, it is the expected value, or mean, ... 
Abnormal Return
A term used to describe the returns generated by a given security ... 
Negative Return
This occurs when a company or business has a financial loss or ... 
Target Return
A pricing model that prices a business based on what an investor ... 
Risk
The chance that an investment's actual return will be different ... 
Return
The gain or loss of a security in a particular period. The return ...

Fundamental Analysis
Explaining Expected Return
The expected return is a tool used to determine whether or not an investment has a positive or negative average net outcome. 
Professionals
Expected And Unexpected Returns
Find out how to apply this to your portfolio. 
Professionals
Measuring Portfolio Returns
NASAA Series 65: Section 16 Measuring Portfolio Returns. In this section different types of risk measures discussed and some sample questions. 
Professionals
Rates of Return
FINRA/NASAA Series 66 Section 1  Rates of Return. In this section internal rate of return (IRR), real return, expected return and riskadjusted return. 
Professionals
Introduction
FINRA/NASAA Series 66: Section 2 Measuring Portfolio Returns. This section discusses different return measures: return on investment, holding period, annualized, risk free and total returns. 
Professionals
Other Terms
FINRA/NASAA Series 66: Section 2 Other Terms. This section discusses measures of portfolio return: risk premium, expected return and benchmark portfolios. 
Professionals
Rates of Return  Internal Rate of Return
FINRA/NASAA Series 65  Rates of Return  Internal Rate of Return. In this section Internal rate of return, real return, riskadjusted return, beta and total return. 
Fundamental Analysis
How To Calculate Your Investment Return
How much are your investments actually returning? Find out why the method of calculation matters. 
Professionals
Risk and Return Measures
Risk and Return Measures 
Professionals
Summary of Return Concepts for Equity Valuation
We differentiate between expected and realized returns. The measure of return between ending and beginning cash flows regardless of time period is called holding period return. The length of ...

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