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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