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.

Return
The gain or loss of a security in a particular period. The return ... 
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 ... 
Gross Rate Of Return
The total rate of return on an investment before the deduction ... 
Accounting Rate of Return  ARR
The amount of profit, or return, that an individual can expect ... 
Intraday Return
One of the two components of the total daily return generated ...

Investing
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. 
ETFs & Mutual Funds
What are Excess Returns?
Excess returns are investment returns that exceed a benchmark or index with similar risk. 
Investing
Calculating Annualized Total Return
The annualized total return is the average return of an investment each year over a given time period. 
Markets
The Most Accurate Way To Gauge Returns: The Compound Annual Growth Rate
The compound annual growth rate, or CAGR for short, represents one of the most accurate ways to calculate and determine returns for individual assets, investment portfolios and anything that ... 
Markets
What's a Return of Capital?
A return of capital is an investment return that is not considered income. 
Markets
What's a Real Rate of Return?
A real rate of return is an annual percentage investment return thatâ€™s adjusted for inflation, taxes or other factors. 
Managing Wealth
More Ways to Evaluate Portfolio Performance
The Jensen measure is another tool investors use to include risk when measuring portfolio performance. 
Managing Wealth
Understanding Total Returns
Total return measures the rate of return earned from an investment over a period of time. 
Investing
What is a Return?
A return is the gain or loss a security generates over a period of time. 
Managing Wealth
What Investors Should Know About Interest Rates
Understanding interest rates helps you answer the fundamental question of where to put your money.

What is the difference between a company's annual return and its annualized return?
Understand the importance of calculating a company's annual return and its annualized return, and learn the differences between ... Read Answer >> 
How does the required rate of return affect the price of a stock, in terms of the ...
First, a quick review: the required rate of return is defined as the return, expressed as a percentage, that an investor ... Read Answer >> 
What is a good annual return for a mutual fund?
Explore the question of what constitutes a good annual return from investing in mutual funds and the factors that affect ... Read Answer >> 
What can cause the rate of return to be negative?
Learn how poor company or sector performance, economic turmoil and inflation can cause the rate of return on an investment ... Read Answer >> 
How can I calculate the expected return of my portfolio?
Understand the components of the equation used to calculate the expected return of an investor's portfolio. Learn why the ... Read Answer >> 
What is the difference between yield and rate of return?
Read about the differences between yield and rate of return. See why many novice investors often struggle more with the concept ... Read Answer >>