Suppose there are 10 possible yields on a risky security and one of those 10 possible yields doubles in size, while a second yield in the set of 10 is cut by half. These two changes taken together are exactly offsetting and the expected yield on the security in question cannot change.

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Quizplus · Accepted Answer

The expected yield of a security is calculated as the sum of all possible yields multiplied by their respective probabilities. Doubling one yield and halving another does not guarantee that the overall expected yield remains unchanged, as the impact on the expected yield depends on the specific values of the yields and their probabilities.

Suppose There Are 10 Possible Yields on a Risky Security