If a stock has a 30% chance of losing 18%, a 40% chance of losing only...

If a stock has a 30% chance of losing 18%, a 40% chance of losing only 3%, and a 30% chance of making 15%, what is the expected return of this stock?

-2.10%

7.25%

11.10%

-7.25%

Expert Solution

Expected return = Probability * Return

Expected return = [0.30 * (-0.18) + [0.40 * (-0.03)] + (0.30 * 0.15)

Expected return = -0.0210 or -2.10%

jeff jeffy answered 2 years ago

ABC Inc.'s stock has a 30% chance of producing a 10% return, a 40% chance of...

ABC Inc.'s stock has a 30% chance of producing a 10% return, a 40% chance of producing a 0% return, and a 30% chance of producing a -5% return. What is the firm's expected rate of return?

You believe Orange, Inc. stock has a 20% chance of making 11%, a 30% chance of...

You believe Orange, Inc. stock has a 20% chance of making 11%, a 30% chance of making 16% and a 50% chance of losing 6%. What is the standard deviation of Orange, Inc. stock return? 10.15% 32.82% 13.73% 4.36%

Taggart Inc.'s stock has a 50% chance of producing a 25% return, a 30% chance of...

Taggart Inc.'s stock has a 50% chance of producing a 25% return, a 30% chance of producing a 10% return, and a 20% chance of producing a −28% return. a. What is their expected rate of return? b. What is their standard deviation of returns? c. What is their coefficient of variation?

Your investment has a 30% chance of earning a 10% rate of return, a 40% chance of earning a 23% rate of return and a 30% chance of earning -7%. What is the standard deviation on this investment?

Your investment has a 30% chance of earning a 10% rate of return, a 40% chance of earning a 23% rate of return and a 30% chance of earning -7%. What is the standard deviation on this investment? (Put your answers in decimal points instead of percentage)You calculated that the average return of your portfolio is 7% and the standard deviation is 17%, what is the value at risk (VaR) at 5% for your portfolio?

each worker employed by risky business has a 25 percent chance of losing his or her...

each worker employed by risky business has a 25 percent chance of losing his or her job in the next year. each worker employed bu safe business has a 2 percent chance of losing his or her job. you manage an insurance company that provides a lump sum of $10,000 to each unemployed worker. a. the minimum amount you would charge risky business for each employee covered by the unemployment policy is $____ b. the minimum amount you would charge...

Problem 1) W congested computer network has a 2% chance of losing a data packet (lost...

Problem 1) W congested computer network has a 2% chance of losing a data packet (lost packets must be resent), and a packet losses are independent events. An e-mail message requires 100 packages. (1) what is the distribution of the number of data packets that must be resent? Please choose one below. (A) Binomial (B) Geometric (C) Poisson (2) What is the probability that at least one packet must be resent? (3) What is the mean of the number of...

Consider Mac who has current wealth (M) of $100,000. Mac faces a 5% chance of losing...

Consider Mac who has current wealth (M) of $100,000. Mac faces a 5% chance of losing her automobile, which is currently worth $25,000. Suppose her utility function is M1/2. What is the expected value of the car? What is Mac’s expected utility if she does not buy insurance? How much would Marcy be willing to pay to insure this car?

Stock has a 25% chance of producing a 36% return, a 50% chance of producing a...

Stock has a 25% chance of producing a 36% return, a 50% chance of producing a 12% return, and a 25% chance of producing a -18% return. What is the firm's standard deviation? Do not round your intermediate calculations.

Value of a stock is currently at $40. Volatility of that stock is 30% per year...

Value of a stock is currently at $40. Volatility of that stock is 30% per year and risk-free interest rate with continuous compounding is at 5% per year. Suppose you are planning to value a 3-month European call option with strike price at $41 using a two-step binomial model. Answer the following using this information. What is the value of the option at present?

1. A firm's stock has 50% chance of a 13% rate of return and a 50% chance...

1. A firm's stock has 50% chance of a 13% rate of return and a 50% chance of a 20% rate of return. What is the standard deviation of return for this stock? Answer as a percent return to the nearest hundredth of a percent as in xx.xx without entering a percent symbol. 2. A firm's stock has 50% chance of a 35% rate of return. a 30% chance of a 18% rate of return. and a 20% chance of a -24%...

Question