Which metric assesses the expected returns while considering various future states of the world?

The metric that assesses the expected returns while considering various future states of the world is the Probability-Weighted Expected Return Model (PWERM). This approach evaluates potential outcomes by assigning probabilities to different scenarios, which allows for a comprehensive analysis of the expected returns across various market conditions.

Using PWERM, analysts can better understand how returns may fluctuate based on differing economic indicators or market events. This is particularly valuable in corporate finance as it helps in decision-making regarding investments, risk assessments, and strategic planning by accounting for uncertainties in the market.

Other metrics listed, such as the OPM (Operating Profit Margin) and the equity risk premium, serve different purposes. The OPM focuses on operating performance and profitability rather than expected returns across potential future states. The equity risk premium measures the extra return over the risk-free rate that investors require to hold equity rather than safe assets, but it does not provide the same detailed scenario analysis as PWERM. The company size premium accounts for the historical excess return of small-cap stocks over large-cap stocks but doesn't directly address expected returns across various future states in the same way as PWERM does.