Expected return is calculated by:
A) multiplying each possible return by the probability, p, of the return occurring.
B) adding each possible return by the probability, p, of the return occurring.
C) dividing each possible return by the probability, p, of the return occurring.
D) None of the above

Question

Quizplus · Accepted Answer

Expected return is calculated by multiplying each possible return by its probability of occurring and then summing all these values. This method reflects the weighted average of all possible returns, with weights being the probabilities of each return.

Expected Return Is Calculated By