Respuesta :
According to the given information, The expected return of the invested amount is 5.8%
Expected return=Respective return*Respective probability
= (0.3 × 36)+(0.25 × -4)+(0.25 × -16)
= 5.8%
- The profit or loss an investor anticipates on an investment with known historical return rates is known as the expected return. It is calculated by averaging the results of multiplying possible outcomes by their likelihood of occurring.
- The amount of profit or loss an investor can expect to experience as a result of an investment is known as the expected return.
- When calculating an expected return, potential outcomes are multiplied by the likelihood that they will occur before being added together.
- It is impossible to guarantee expected returns.
- The weighted average of the expected returns of each investment in a portfolio of investments determines the portfolio's expected return.
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