Expected Return Returns

This is a riskless investment, at least in nominal terms.

To provide a contrast, consider an investor who invests in Disney. This investor, having done her research, may conclude that she can make an expected return of 30% on Disney over her 1-year holding period. The actual return over this period will almost certainly not be equal to 30%; it might be much greater or much lower. The distribution of returns on this investment is illustrated in Figure 3.2:

Figure 3.2: Probability D/sinb utron for Risky investment

Figure 3.2: Probability D/sinb utron for Risky investment

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