Overview

Expected return on an investment is the sum of all possible returns multiplied by the probability of each outcome. It is the expected value that an investor would get from an investment based on the probability distribution of all potential returns. The formula for calculating the expected return is:

Expected Return = R1P1 + R2P2 + ... + RnPn

Where:

R = Return in a given scenario

P = Probability of a return being earned in the specific scenario

n = Number of possible outcomes

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