I am told that if I invest $20 in this Apple Stock, in one years time there is a:
- 10% chance I'll get back $25
- 10% chance I'll get back $20
- 30% chance I'll get back $15
- 50% chance I'll get back $10
So my what I'm calling my "Return on Investment" would be: $25 * .1 + $20 * .1 + $15 * .3 + $10 * .5 = $14
I'm assuming this is some sort of statistical calculation that I just did, but I'd like to know the name of this statistical process. (I would say something like amortization, but that's not right.)
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