The compute forward-looking expected return and risk is economically predicting the future of a company's stock performance. A company's expected return is economically forecasted for a probable chance of return. If the economy goes into a recession, then a company's stock may fall. The expected return calculation will provide an average return over time; therefore, not during any one year. The expected return will also characterize the risks, and as we are forecasting our expected return, standard deviation would be used to measure a company's risks. In between looking at a company's stock performance, investors may also look at future stock prices and collection of dividends. Financial analysts may assume a constantly growing dividend, known as the constant-growth model. The growth may be small or slow, but as stated in our reading "In the long run, no company can grow faster than the overall economic growth rate forever." Several methods are used to estimate a company's growth such as projecting future dividend trends and determine future and past growth rates to help weigh out returns and risks of one's stock purchase decision. Reply