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You are considering investing on stock A or B both of which are selling for $50. You plan to sell the stock in one year.
Posted: Fri Jul 01, 2022 8:20 am
by answerhappygod
- You Are Considering Investing On Stock A Or B Both Of Which Are Selling For 50 You Plan To Sell The Stock In One Year 1 (13.64 KiB) Viewed 32 times
You are considering investing on stock A or B both of which are selling for $50. You plan to sell the stock in one year. You believe these two companies will not pay any dividend and the prices one year from now will have the following probability distribution. Will you choose to invest on A or B if you are risk averse? Price in one year 48 49 52 Stock A 55 probability 0.1 0.2 0.3 0.4 Price in one year 45 50 55 Stock B probability 0.2 0.3 0.5