Expected Return Calculator

How it is calculated

Each scenario has a return in percent (r1, r2, r3) and a probability in percent (p1, p2, p3). The tool computes expected return = (r1 × p1 + r2 × p2 + r3 × p3) ÷ 100. Dividing by 100 turns the probabilities from percent into fractions, so the answer is again a percent return. It also shows the total probability, p1 + p2 + p3, and the best case, the highest of the three returns. Returns may be negative but must be above −100%; probabilities cannot be negative, and all six fields must be filled. The three probabilities must add up to 100% (a rounding tolerance of about 0.1 point is allowed, so 33.3 three times still works); any other total, such as 130% or 0.3 + 0.5 + 0.2, gives no result, and nothing is rescaled. The best case ignores probability, so it is shown even for a scenario given 0%.

Common mistakes

• Entering probabilities as fractions (0.3, 0.5, 0.2) instead of percent. They total 1, not 100, so the tool shows no result rather than a tiny number.
• Probabilities that do not total 100%. A set adding to 130% or 80% is rejected, so fix the scenarios rather than expecting the tool to rescale them.
• Entering a loss as a positive number. A 15% loss must be typed as −15. A return of −100% or lower is not accepted either.
• Reading the expected return as the likely outcome. In the example, no single scenario returns 8.5%; it is only the long-run average.
• Believing the best-case line has a probability behind it. It is simply the largest return you typed in, even if you gave that scenario a probability of zero.