anonymous
  • anonymous
how do i find expected rate of return?
Finance
  • Stacey Warren - Expert brainly.com
Hey! We 've verified this expert answer for you, click below to unlock the details :)
SOLVED
At vero eos et accusamus et iusto odio dignissimos ducimus qui blanditiis praesentium voluptatum deleniti atque corrupti quos dolores et quas molestias excepturi sint occaecati cupiditate non provident, similique sunt in culpa qui officia deserunt mollitia animi, id est laborum et dolorum fuga. Et harum quidem rerum facilis est et expedita distinctio. Nam libero tempore, cum soluta nobis est eligendi optio cumque nihil impedit quo minus id quod maxime placeat facere possimus, omnis voluptas assumenda est, omnis dolor repellendus. Itaque earum rerum hic tenetur a sapiente delectus, ut aut reiciendis voluptatibus maiores alias consequatur aut perferendis doloribus asperiores repellat.
chestercat
  • chestercat
I got my questions answered at brainly.com in under 10 minutes. Go to brainly.com now for free help!
anonymous
  • anonymous
Expected rate of return is calculated as (Projection over or below RFR * Probability of scenario)_all\[ER=\sum_{i=1}^{n} (r _{i}*P _{i})\] where: \[r _{i}=projected return above or below RFR\] P= the probability of the above scenario Ex. If the market projection for a stock say 12% with a probability of .3, 14% with a probability of .6 & 16% with probability of .1 then ER = 12%*.3+14%*.6+16%*.1=14% This is then compared with the required rate of return RR to decide upon investments.

Looking for something else?

Not the answer you are looking for? Search for more explanations.