Expected Return is the return that an investor expects an investment to earn over the next period. Actual return may be higher or lower. It may be based on a detailed analysis of a firm's future prospects.
Expected Return is the return that an investor expects an investment to earn over the next period. Actual return may be higher or lower. It may be based on a detailed analysis of a firm's future prospects.
Expected Return is the return that an investor expects an investment to earn over the next period. Actual return may be higher or lower. It may be based on a detailed analysis of a firm's future prospects.
Expected Return: This is the return that an investor expects an investment to earn over the next period. The actual return may be either higher or lower It may be simply the average return per period a security has earned in the past . It may be based on a detailed analysis of a firms future prospects. It may be based on special information. Expected Return, Variance & Standard Deviation Expected Return (ERA) of Supertech Limited: State of Economy % Return Depression -20 Recession 10 Normal 30 Boom 50 Expected Return (ERA)= -0.20 + 0.10 + 0.30 + 0.50 4 = 0.70 /4 = 0.1750 = 17.50%
Expected Return, Variance & Standard Deviation Deviation from Expected Return:(ER= 17.50% or 0.1750) State of Economy Rate of Return Deviation from ER (Ri ER) Depression -0.20 -0.20 0.175 = -0.375 Recession 0.10 0.10 0.175 = -0.075 Normal 0.30 0.30 0.175 = 0.125 Boom 0.50 0.50 0.175 = 0.325 Expected Return, Variance & Standard Deviation Deviation from Expected Return:(ER= 17.50% or 0.1750) State of Economy Rate of Return Deviation from ER Squared Value of Deviation (Ri ER) (Ri ER) Depression -0.20 -0.20 0.175 = -0.375 (-0.375) = 0.140625 Recession 0.10 0.10 0.175 = -0.075 (-0.075) = 0.005625 Normal 0.30 0.30 0.175 = 0.125 (0.125) = 0.015625 Boom 0.50 0.50 0.175 = 0.325 (0.325) = 0.105625 0. 267500
Variance [ Var (RA)] = = 0.267500 =0.066875 4 Variance of a security measures variability of an individual securitys return Standard Deviation [SD (RA)] = = 0.066875 = 0.2586
= 25.86%
Expected Return, Variance & Standard Deviation Expected Return of Slowpoke Limited.
State of Economy Slowpoke Rate of Return (%) Depression 5 Recession 20 Normal -12 Boom 9 Expected Return (ER) = 0.05+0.20-0.12+0.09 = 0.22 = 0.055 4 4 = 5.5% Expected Return, Variance & Standard Deviation Expected Return of Slowpoke Limited.
State of Economy Rate of Return (%) Deviation (Ri ER) Squared Value of Deviation (Ri ER) Depression 5 0.05 0.055 = -.005 (-.005) = 0.000025 Recession 20 0.20 0.055 = 0.145 (0.145) = 0.021025 Normal -12 -0.12 0.055 = -0.175 (-0.175) = 0.030625 Boom 9 0.09 0.055 = 0.035 (0.035) = 0.001225 0.052900 ER = 0.05+0.20-0.12+.09 = 0.055 = 5.5% ; = 0.052900 = 0.013225; = 0.013225 = 0.115000 = 11.5% 4 4 Expected Return, Variance & Standard Deviation Covariance = (RA ERA ) X (RB ERB ) It is interrelation between the two securities.
Correlation coefficient = Covariance A, B (A ) ( B ) It is a relative measure of a given relationship