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Expected Average Return vs Expected Reurn
AFM
Sir in Question 30, we solved Expected Average Return considering the Expected Price (Price * Proability), In this Question 34, for Expected Return, we are doing (Return * Probability) is this difference way doing is due to to the word "Average" in Expected Average Return ? Video Details ------------- Advanced Financial Management - AFM Portfolio Management #67. Illustration # 34 - Expected Return & SD
Answers (3)
Sriram Somayajula Admin
There is no diff in working based on average exp return & expected return there is no div in one case & there is div in other case
Sir in Problem 30 and 34,Expected Return is calulated differently,Probability usage is treated differently
Thread Starter
Hemachandra DSir in Problem 30 and 34,Expected Return is calulated differently,Probability usage is treated differently
In Q 34 if you compute expected return by multiplying price with probability you will get an expected price of 160 - current price of 150 so expected return of 10 , i.e 10/150 = 6.67% You get the same expected return when you multiplied probability with % return or proabability with price So there is no difference
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