A broker tells you that if you invest in a this large company: the chance of gaining 10% is 0.2, the chance of gaining 5% is 0.5, but the chance of losing 5% is 0.3. Assuming he is correct, what is the expected investment return?
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Step 1
- For gaining 10%: 0.2 * 10% = 2% - For gaining 5%: 0.5 * 5% = 2.5% - For losing 5%: 0.3 * -5% = -1.5% Show more…
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