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Expected Return

Definition: Amount of net profit projected from a business venture. Definition: [crh] The expected return on a risky asset, given a probability distriDefinition: bution for the possible rates of return. Expected return equals some risk-free rate (generally the prevailing U.S. Definition: ="/?rd=Treasury">Treasury note or bond rate) plus a risk premium (the difference between the historiDefinition: c market return, based upon a well diversified index such as the S&P 500 and the historic U.S. Definition: Treasury bond) multiplied by the asset's beta. The conditional expected return varies through time as a funDefinition: ction of current market information.

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