Mean Return

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in security analysis, expected value, or mean, of all the likely returns of investments comprising a portfolio; in capital budgeting, mean value of the probability distribution of possible returns. The portfolio approach to the analysis of investments aims at quantifying the relationship between risk and return. It assumes that while investors have different risk-value preferences, rational investors will always seek the maximum rate of return for every level of acceptable risk. It is the mean, or expected, return that an investor attempts to maximize at each level of risk. Also called expected return. See also capital asset pricing model, efficient portfolio, Portfolio Theory.

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1. In securities analysis, it is the expected value, or mean, of all the likely returns of investments comprising a portfolio. It is also known as "expected return".
 
2. In capital budgeting, it is the mean value of the probability distribution of possible returns.

Investopedia Says:
Mean returns attempt to quantify the relationship between the risk of a portfolio of securities and its return. It assumes that while investors have different risk tolerances, rational investors will always seek the maximum rate of return for every level of acceptable risk. It is the mean, or expected, return that investors try to maximize at each level of risk.

Related Links:
Learn how the expected extra return on stocks is measured and why academic studies usually estimate a low premium. The Equity-Risk Premium: More Risk For Higher Returns
See the model in action with real data and evaluate whether its assumptions are valid. Calculating The Equity Risk Premium
Learn how to assess whether a company's pension plan is posing more risks than what the footnotes indicate. How To Evaluate Pension Risk By Analyzing Annual Costs


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Expected Return (finance term)
Required Rate of Return (finance term)
Risk Averse (finance term)
Standard Deviation (finance term)
Fixed-Income Securities (finance term)