Which is the following statements is correct?
A) The expected return is the return of a security that we compute based on the payoff value that we expect to receive on average.
B) The expected return is the return of a security that we compute based on the future value that we expect to receive on average.
C) The expected return is the return of a security that we compute based on the present value that we expect to receive on average.
D) The expected return is the return of a security that we compute based on the book value that we expect to receive on average.

Question

Quizplus · Accepted Answer

The expected return is the return on a security that we compute based on the payoff value that we expect to receive on average. It is the weighted average of the potential returns, where each potential return is multiplied by its probability of occurrence.

Which Is the Following Statements Is Correct