 In this section, I am going to tell you how to calculate the expected value of rate of return or the mean of the expected returns using Microsoft Excel. So, you will have to follow certain steps. So, firstly, you need to get the data. What do you need in the data? Two types of information. What are the expected returns? And what are their respective probabilities? What are the chances of occurrence? For example, if you understand that your stock will give 30% return in December. What is the chance of that? What is the probability of getting 30% return? Is it 10% or 20%? And how will this go? Again, the overall economic conditions, the conditions of that particular company, the financial experts on that basis, they calculate the probabilities and define them. So, this is the chance of getting this particular return. So, what do you have to do? You need two types of data, the probability and the expected returns of a certain stock in different periods of time. What are the expected returns and what are the corresponding probabilities? You need to get these two information. After that, you need to multiply the value of the return with the corresponding probability value. So, you need to get the column and multiply it. Then, you need to add up the value of your sum. That will be your mean. So, the mean of the expected returns will be obtained by simply adding all the probabilities multiplied by their respective corresponding returns. How will this happen? I am just going to take you to the excel sheet where I have entered this data to show you how it will work. And here we go. You can see that we have the economy and its three forms written in this column. Then, I have taken the rate of return and I have taken two companies here. For example, one company's name is RISCO. The other company's name is GENCO. And in the three possible weak, strong and normal situations of the economy, the returns of RISCO are written here. What are the returns of GENCO? The expected returns are written here. And what is the probability of getting all these returns? You can see that in the last column. So, this is 0.2, 0.6, 0.2 for all the three times. Now, what you have to do? First of all, you have to take out the mean. So, how will the mean come out? How will the expected value of the rate of return come out? For that, I have taken the rate of return from here. And in front of that, I have written the probability. So, I have not written any mathematical formula yet. I have just copied this information from this column and this column to this particular column. After that, I have written a formula. As you can see here, I have multiplied the return with the corresponding probability in this column. Basically, you can see the formula bar here. I have multiplied C5 from D5. I have multiplied minus 10% with 0.2. So, I have got this minus 0.02. Similarly, I have done this with two more values. And then I have summed it at the end. So, if you get an excel, then it is a very good thing. If you do not get an excel, then you simply have to write an equal sign. You have to sum it up. And you have to tell it the range of these three values. So, it will give you the value. It will collect them. So, when we collected them, we got 0.1. So, 0.1 is the mean of the expected rate of return. The three rates of return, what is their expected value? That is, what is their mean? That is, what is their average? They will give you 0.1. Now, if we convert this to percentage, if we give it 100, then you will get 10%. So, this means that your mean expected rate of return, that is, 10%, I have given you this here. Fine. So, when we remove the mean, the mean is not the only thing that we should know. We should also know that what is the fluctuation in this and how much it can be. And to estimate that thing, we also need standard deviation apart from the mean. So, now we will learn in the next section what is the meaning of standard deviation and how we will calculate it. Expected rate of returns. Take this.