The expected return on a share that is computed using economic probabilities is:
A)guaranteed to equal the actual average return on the share for the next ﬁve years.
B)guaranteed to be the minimal rate of return on the share over the next two years.
C)guaranteed to equal the actual return for the immediate twelve month period.
D)a mathematical expectation based on a weighted average and not an actual anticipated
Outcome.
E)the actual return you will receive.

Question

Quizplus · Accepted Answer

Economic probabilities are used to estimate the expected return on a share using a weighted average of possible outcomes. It is not a guarantee of the actual return, but rather a statistical estimate based on probabilities. Therefore, the expected return on a share computed using economic probabilities is a mathematical expectation based on a weighted average and not an actual anticipated outcome.

The Expected Return on a Share That Is Computed Using