Which of the following is the best definition of expected return?

A) Percentage of a portfolio's total value in a particular asset.
B) Group of assets such as stocks and bonds held by an investor.
C) The difference between the return on a risky investment and a risk-free investment
D) Return on a risky asset expected in the future.
E) Equation of the SML showing the relationship between expected return and beta.

Expected Return

Expected return is the anticipated profit or loss from an investment, based on the potential outcomes and their probabilities, often used to evaluate investment choices.

Risky Asset

An asset that carries a degree of risk that the value or return could be higher or lower than expected.

Future

Represents the time period that has not occurred yet, often used in the context of predicting economic, financial, or technological developments.