An expected rate of return is denoted by

April 15, 2024 by rawan239

an investment, weighted by their probabilities. For example, if an investment has a 50% chance of returning 10% and a 50% chance of returning 20%, then the expected rate of return is $\bar{e} = (0.5 \times 10\%) + (0.5 \times 20\%) = 15\%$.

The other options are incorrect. Option B, $r-bar$, is the symbol for the arithmetic mean of a set of numbers. Option C, $r-hat$, is the symbol for the sample mean of a set of numbers. Option D, $e-hat$, is not a commonly used symbol.