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An investment opportunity has 4 possible outcomes. The possible returns in each of these outcomes are -16.2%, -8.7%, 1.7% and 38%.

An investment opportunity has 4 possible outcomes. The possible returns in each of these outcomes are -16.2%, -8.7%, 1.7% and 38%. If each of these outcomes is equally likely, what is the Expected Return (as measured by the population mean) of this investment? Provide the answer as a % with 1 decimal rounded off. If your answer is 3.56%, just enter/type"3.6"

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Expert Solution

Probability (P) RETURN (Y) (P * Y )
25% -16.2 -4.05
25% -8.7 -2.18
25% 1.7 0.43
25% 38 9.50
TOTAL 3.70
Expected Return = (P * Y)
3.70%

jeff jeffy answered 2 years ago
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