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In: Accounting

Q: What is the expected return for a security given the following information?

Q: What is the expected return for a security given the following information?

 

• 6.75%

• 9.50%

• 16.75%

• 18.25%

• 21.50%

Solutions

Expert Solution

The option (3) is right option.

 

Explanation:

         
Economic state Probability return probability*return  
A 35% 20% 7.00%  
B 15% 35% 5.25%  
C 25% 6% 1.50%  
D 25% 12% 3.00%  
expected return =sum of (probability*return)     16.75%  
Options is 3 16.75%      

 

Hence, option "3" is right option.

The option 3 is right option.

Junaid answered 2 years ago
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