1. What Is Expected Range of Return?

The expected range of return is a measure of investment performance variability, calculated as the difference between the upper and lower bounds of projected returns. It helps investors understand the potential spread of investment outcomes.

2. How Does the Calculator Work?

The calculator uses the simple range formula:

Where:

• \( Upper\_bound \) — The highest expected return percentage
• \( Lower\_bound \) — The lowest expected return percentage

Explanation: The range provides a quick snapshot of the potential variability in investment returns, with wider ranges indicating greater uncertainty.

3. Importance of Range Calculation

Details: Understanding the range of possible returns helps investors assess risk tolerance, set realistic expectations, and make informed investment decisions.

4. Using the Calculator

Tips: Enter both upper and lower bound percentages. The upper bound must be greater than the lower bound for valid calculation.

5. Frequently Asked Questions (FAQ)

Q1: What's a typical range for stock investments?
A: Historically, stocks have shown annual return ranges between -40% to +40%, though this varies by market conditions and investment type.

Q2: How does range relate to risk?
A: Generally, wider ranges indicate higher potential volatility and risk, while narrower ranges suggest more stable returns.

Q3: Should I only consider the range when investing?
A: No, range should be considered alongside other metrics like average return, standard deviation, and your personal risk tolerance.

Q4: How often should I recalculate expected ranges?
A: Regular reviews (quarterly or annually) are recommended as market conditions and investment fundamentals change.

Q5: What about investments with asymmetric ranges?
A: Some investments may have different upside vs. downside potentials, which simple range calculations don't capture - consider probability distributions.