The expected return is the projected profit or loss that an investor anticipates on an investment, especially when historical rates of return (RoR) are known. To calculate it, potential outcomes are multiplied by their respective probabilities of occurrence, and these results are then summed. This metric provides investors with an estimate of the average outcome they can reasonably expect from their investment based on historical data and probability assessments. It serves as a valuable tool for assessing and comparing the potential risks and rewards associated with different investment choices.
Schedule a Complimentary Consultation.