Expected return

Expected return
The expected return of an investment is exactly what it says. The return on most investments is uncertain, however it is possible to describe the future returns statistically as a probability distribution.

Expected Returns From Investing in Stocks
This article provides calculations and insight as to what return you can logically expect from investing in stocks in general or in a particular stock.

expected return
the return a portfolio would earn based on its beta .
See also mean return ...

Definition of
expected return
Finance
probable return on investment the projected percentage return on an investment, based on the weighted probability of all possible rates of return.

EXPECTED RETURN - The expected return on a risky asset, given a probability distribution for the possib...
EXPECTED RETURN ON INVESTMENT - The return one can expect to earn on an investment. See: Capital asset ...

Mean-Variance Analysis: Risk vs. Expected Return
Mean-Variance Analysis quantifies the notions of risk and expected return by applying concepts from statistics. The values of assets are taken to be random variables with various expected values ...

Expected return
The return expected on a risky asset based on a probability distribution for the possible rates
of return. Expected return equals some risk free rate (generally the prevailing U.S. Treasury note or bond rate) ...

Expected return:
The average of a probability distribution of possible returns.
Expense Ratio ...

Expected Return: The estimated return on an investment calculated by examining returns based on the likelihood of different outcomes.

expected return the return on an uncertain investment calculated by weighting the gains or losses by the probability that they will occur. (13) ...

Expected returns
The CAPITAL GAIN plus INCOME that investors think they will earn by making an INVESTMENT, at the time they invest.
Expenditure tax ...

Expected Return
Estimation of the value of an investment, including the change in price and any payments or dividends, calculated from a probability distribution curve of all possible rates of return.

Maximum expected return criterion (MERC)
Standard that one choose the asset with the highest anticipated return.
Mean ...

Expected returns for all portfolio assets (often estimated by averaging historical returns)
Risk for all portfolio assets (estimated by volatility or standard deviation)
Correlation between all portfolio assets ...

Expected return on a portfolio of all a firm's securities. Used as a hurdle rate for capital investment.

Expected return:
where Rp is the return on the portfolio, Ri is the return on asset i and wi is the weighting of component asset i (that is, the share of asset i in the portfolio).

Expected return The expected on a risky based on a for the possible rates of return.
Expected value The weighted of a .

Expected return that is foregone by investing in a project rather than in comparable financial securities.
Opportunity costs ...

Expected return on a security. The market-consensus estimate of the appropriate discount rate for a firm's cash flow.
Market clearing ...

The expected returns from an investment depend upon the risk involved in the investment. For the purpose of comparing returns from investments involving varying levels of risk, the returns are adjusted for the level of risk before comparison.

The expected return which is foregone when funds are invested in a project rather than in financial securities with a comparable level of risk.

The expected return/standard deviation pairs of all portfolios that can be constructed from a given set of assets.
Popular terms ...

= the expected return
= the abnormal return
Capital Budgeting
Capital budgeting is the set of procedures and economic evaluation techniques used to analyze long-term capital investments.

is the expected return on the capital asset
is the risk-free rate of interest such as interest arising from government bonds ...

For any expected return, consider all the portfolios which have that expected return. From among them all, select the one which has the lowest volatility.

Portfolio expected return
A weighted average of individual assets' expected returns.

A projection of expected returns - what investors expect to realize as a return.
Exchange Fund Account ...

Capital asset pricing model (CAPM)An economic theory that describes the relationship between risk and expected return, and serves as a model for the pricing of risky securities.

A formula relating risk to expected return that is used to price particularly... capital budget Plan for new acquisitions and replacements of long-term assets.Assets considered...

Magic of diversification The effective reduction of risk (variance) of a portfolio, achieved without reduction to expected returns through the combination of assets with low or negative correlations (covariances).

Security market line Line representing the relationship between expected return and market risk or beta. The slope of this line is the risk premium for beta.

Required return The minimum expected return you would need in order to purchase an asset, that is, to make the investment.

Efficient frontier A graph representing a set of portfolios that maximizes expected return at each level of portfolio risk.

Required return The minimum expected return you would require to be willing to purchase the asset, that is, to make the investment.

Equality of expected returns on otherwise comparable financial assets denominated in two currencies, without any cover against exchange risk.

A theory on how risk-averse investors can construct portfolios in order to optimize market risk against expected returns. The theory emphasizes that risk should not be viewed in a negative context, but rather as an inherent part of greater reward.

Excess return is the difference between the expected return of a risky investment and a risk-free investment. It depends on non-diversifiable risk measured by in the CAPM model, and the market risk premium.

A portfolio that provides the greatest expected return for a given level of risk, or the lowest risk for a given expected return. Also calle...(Read more)
Electronic Data Gathering, Analysis And Retrieval System ...

Mean return for investors is the average expected return of an investment or portfolio. Mean return is usually used to connote average probability-weighted return on an arithmetic mean basis.

E - earnings yield, economic value added, EVA, efficient markets hypothesis, EMH, equilibrium, excess return, expected return ...

One implication of Sharpe's work is that the expected return on a portfolio in excess of a riskless return should be beta times the excess return of the market.

An economic theory that describes the relationship between risk and expected return, and serves as a model for the pricing of risky securities.

The choice of assets, to be part of the product, generally depends on the level of risk associated with the expected return. Various assets are bundled depending on the investor's objectives.

Capital Asset Pricing Model - Is a tool that relates an asset's expected return to the market's expected return. It combines the concepts of efficient capital markets with risk premiums.

An asset or a portfolio of assets is considered to be efficient if no other asset or portfolio of assets offers a higher expected return with the same (or lower) risk or offers a lower risk with the same (or higher) expected return.

A company's total value of assets including the appropriately present valued expected returns to all factors of production used to produce goods or services assuming that those assets and factors continue to be used in their current configuration.

In order to understand the expected return on any investment the investor needs to know what the income will be, and what the capital return is going to be. For a bond you can calculate two yields.

Equation in modern portfolio theory expressing the idea that securities in the market are priced so that their expected return will compensate investors for their expected risk.

CAPM provides an explicit expression of the expected returns for all assets. Basically, the model holds that if investors are risk averse, high-risk stocks must have higher expected returns than low-risk stocks.

This method computes your investment in the contract as a percentage of your expected return, based on your life expectancy under IRS tables.

The expected return of a market portfolio is identical to the expected return of the market as a whole.

Capital Market Line This is a graphical line which represents a linear relationship between the expected return and the total risk (standard deviation) for efficient PORTFOLIOS of risky and riskless securities.

Sophisticated model of the relationship between expected risk and expected return. The model is grounded in the theory that investors demand higher returns for higher risks.

Business firms generally compare the expected return on physical capital (the marginal efficiency of investment) with the return on financial capital (the interest rate).

An average representing the expected return on all of a company's securities. Each source of capital is weighted according to its prominence in the company's capital structure.
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Efficient Portfolio
Portfolio with a maximum expected return for any specific risk level, or a minimum risk level for any specific expected return.
See: Required Rate Of Return; Return ...

Exante returnThe expected return of a portfolio based on the expected returns of its component assets and their weights.
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Sum of the differences between the expected return on a stock (systematic risk multiplied by the realized market return) and the actual return often used to evaluate the impact of news ona stock price.

See also: Abnormal Return, Expected Return, Return, Return on Investment (ROI), Risk Adjusted Return
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EFFICIENT PORTFOLIO:  A portfolio with the highest level of expected return for a given level of risk or a portfolio with the lowest risk for a given level of expected return.

See also: Expense, Banks, Systematic risk, Values, Asset pricing model