Expected Returns Expected returns are based on the probabilities of possible outcomes In this context,“expected”means“average if the process is repeated many times The "expected"return does not even have to be a possible return E(R)=∑p,R i=l3 Expected Returns n Expected returns are based on the probabilities of possible outcomes n In this context, “expected” means “average” if the process is repeated many times n The “expected” return does not even have to be a possible return   n i E R piRi 1 ( )