An investment's expected rate of return is found by multiplying which of the following?
A)each possible outcome's variance by its probability
B)each possible outcome's standard deviation by its average rate of return.
C)the average return of each occurrence by its squared variance
D)each possible outcome or "state" by its probability of occurrence

Question

Quizplus · Accepted Answer

The expected rate of return for an investment is calculated by multiplying each possible outcome or "state" by its probability of occurrence and then summing these products. This method accounts for all potential outcomes and their likelihoods, providing a weighted average return based on probabilities.

An Investment's Expected Rate of Return Is Found by Multiplying