You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding

Business, Finance, Economics, Accounting, Operations Management, Computer Science, Electrical Engineering, Mechanical Engineering, Civil Engineering, Chemical Engineering, Algebra, Precalculus, Statistics and Probabilty, Advanced Math, Physics, Chemistry, Biology, Nursing, Psychology, Certifications, Tests, Prep, and more.
Post Reply
answerhappygod
Site Admin
Posts: 899603
Joined: Mon Aug 02, 2021 8:13 am

You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding

Post by answerhappygod »

You are considering buying a share of stock in a firm that has
the following two possible payoffs with the corresponding
probability of occurring. The stock has a purchase price of $15.00.
You forecast that there is a 30% chance that the stock will sell
for $30.00 at the end of one year. The alternative expectation is
that there is a 70% chance that the stock will sell for $10.00 at
the end of one year. What is the expected percentage return on this
stock, and what is the return variance?
6.67%, 9.17%
84.00%, $9.67
6.67%, 37.33%
1.00%, 93.50%
Join a community of subject matter experts. Register for FREE to view solutions, replies, and use search function. Request answer by replying!
Post Reply