1. What is Expected Range of Return?

The Expected Range of Return is a measure of potential variability in stock performance, calculated as the difference between the maximum expected return and minimum expected return. It helps investors understand the potential spread of investment outcomes.

2. How Does the Calculator Work?

The calculator uses the simple range formula:

Where:

• \( Max_{return} \) — Maximum expected return percentage
• \( Min_{return} \) — Minimum expected return percentage

Explanation: The range shows the spread between best-case and worst-case scenarios for a stock's performance.

3. Importance of Range Calculation

Details: Understanding the potential range of returns helps investors assess risk and set realistic expectations. A wider range indicates higher volatility and uncertainty.

4. Using the Calculator

Tips: Enter your estimated maximum and minimum returns as percentages. The values can be based on historical performance, analyst estimates, or your own projections.

5. Frequently Asked Questions (FAQ)

Q1: How do I determine max and min returns?
A: These can be based on historical volatility, analyst price targets, or statistical models like Monte Carlo simulations.

Q2: What does a large range indicate?
A: A large range suggests higher volatility and greater uncertainty about the stock's performance.

Q3: How is this different from standard deviation?
A: Range shows absolute spread between extremes, while standard deviation measures dispersion around the mean.

Q4: Should I be concerned about a wide range?
A: It depends on your risk tolerance. Conservative investors may prefer narrower ranges, while risk-tolerant investors might accept wider ranges for growth stocks.

Q5: How often should I update these estimates?
A: Regularly, especially when new financial data becomes available or market conditions change significantly.