The expected return on a stock that is computed using economic probabilities is:

A) Guaranteed to equal the actual average return on the stock for the next five years.
B) Guaranteed to be the minimal rate of return on the stock over the next two years.
C) Guaranteed to equal the actual return for the immediate twelve month period.
D) A mathematical expectation based on a weighted average and not an actual anticipated outcome.
E) The actual return you should anticipate as long as the economic forecast remains constant.

Question

Moneek Dunkley · Accepted Answer

Final Answer : D, Explanation :  The expected return computed using economic probabilities is a mathematical expectation based on a weighted average of possible outcomes. It is not a guarantee of future performance but rather an estimate that helps investors make informed decisions.

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