What Are Expected Returns and How to Use Them

Remember, you can’t actually expect to get the expected rates of return

Paul D. Kaplan 23 February, 2021 | 12:19AM

Falling Dice

The term “expected return” can be confusing. It not a rate of return that you actually expect to get. Rather, it is the probability-weighted average of all possible returns that you might receive over some period of time, such as a year.

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About Author

Paul D. Kaplan  Paul D. Kaplan, Ph.D., CFA, is director of research with Morningstar Canada.

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