Mean Return


DEFINITION of 'Mean Return'

1. In securities analysis, it is the expected value, or mean, of all the likely returns of investments comprising a portfolio. It is also known as "expected return".

2. In capital budgeting, it is the mean value of the probability distribution of possible returns.


Mean returns attempt to quantify the relationship between the risk of a portfolio of securities and its return. It assumes that while investors have different risk tolerances, rational investors will always seek the maximum rate of return for every level of acceptable risk. It is the mean, or expected, return that investors try to maximize at each level of risk.

  1. Unsystematic Risk

    Company or industry specific risk that is inherent in each investment. ...
  2. Systematic Risk

    The risk inherent to the entire market or entire market segment. ...
  3. Expected Value

    Anticipated value for a given investment. In statistics and probability ...
  4. Capital Budgeting

    The process in which a business determines whether projects such ...
  5. Actual Return

    The actual gain or loss of an investor. This can be expressed ...
  6. Abnormal Return

    A term used to describe the returns generated by a given security ...
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