how to calculate the probability of expected return?
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It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these results. For example, if an investment has a 50% chance of gaining 20% and a 50% chance of losing 10%, the expected return is 5% (50% x 20% + 50% x -10% = 5%).
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ROI is calculated by subtracting the initial value of the investment from the final value of the investment (which equals the net return), then dividing this new number (the net return) by the cost of the investment, and, finally, multiplying it by 100.
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Variance: Var(X) To calculate the Variance: square each value and multiply by its probability. sum them up and we get Σx2p. then subtract the square of the Expected Value μ
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The expected value (EV) is an anticipated value for an investment at some point in the future. In statistics and probability analysis, the expected value is calculated by multiplying each of the possible outcomes by the likelihood each outcome will occur and then summing all of those values.
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To find the probability of at least one of something, calculate the probability of none and then subtract that result from 1. That is, P(at least one) = 1 – P(none). Topford supplies X-Data DVDs in lots of 50, and they have a reported defect rate of 0.5% so the probability of a disk being defective is 0.005.
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The formula for calculating return on capital is relatively simple. You subtract net income from dividends, add debt and equity together, and divide net income and dividends by debt and equity: (Net Income-Dividends)/(Debt+Equity)=Return on Capital.
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['% yield = actual amount obtained x 100 / maximum theoretical amount possible.', '% yield = 4.1 x 100 / 4.4 = 93.2% (to 1dp, 3sf)']
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['2 to 5 odds. This means that out of 7 possible outcomes, odds are that there will be 2 of one kind of outcome and 5 of another kind of outcome. ... ', '2 to 5 probability. There is a 28.57 percent probability of a particular outcome and 71.43 percent probability of another outcome.', '2 to 5 odds payout.']
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['Projected growth rate = ((Targeted future value – Present value) / (Present value)) * 100. ... ', 'Growth Rate (Future) = ($125,000 – $50,000) / ($50,000) * 100 = 150%']
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To convert odds to probability, take the player's chance of winning, use it as the numerator and divide by the total number of chances, both winning and losing. For example, if the odds are 4 to 1, the probability equals 1 / (1 + 4) = 1/5 or 20%.
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['Rate of return - the amount you receive after the cost of an initial investment, calculated in the form of a percentage.', 'Rate of return formula - ((Current value - original value) / original value) x 100 = rate of return.', 'Current value - the current price of the item.']
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How to Calculate the Time-Weighted Return. First, you'll want to calculate the rate of return for each of your sub-periods. You can do this by subtracting the beginning balance of the period from the ending balance of the period. Then divide the difference by the beginning balance of the period.
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['20% (PD) x 70% (LGD) x 1 000 (EAD); PLUS.', '80% (=probability of NO default = 100% – PD) x 0% (zero loss) x 1 000 (EAD)', '= 140.']
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The simplest way to calculate and consider a rate of return is to consider the ending balance and how it relates to the gains. In our example above, the total gain is $800, relating to the balance of $8,800. To calculate that as a ratio, divide the amount of the gain by the ending balance and multiply by 100.
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['Rate of Return = (10 * 1000 – 5 * 1000) * 100 / 5 *1000.', 'Rate of Return = (10,000 – 5,000) * 100 / 5,000.', 'Rate of Return = 5,000 * 100 / 5,000.', 'Rate of Return = 100%']
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10. Complete the following expected value table. Like data, probability distributions have standard deviations. To calculate the standard deviation (σ) of a probability distribution, find each deviation from its expected value, square it, multiply it by its probability, add the products, and take the square root.
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['Covariance measures the total variation of two random variables from their expected values. ... ', 'Obtain the data.', 'Calculate the mean (average) prices for each asset.', 'For each security, find the difference between each value and mean price.', 'Multiply the results obtained in the previous step.']