There is 70% chance the total return on IBM stock will be -3.95%, a 30% chance it will be +3.27%. Calculate the expected return. A- 0.77454 B- 0.01784 C- 0.77297 D- 0.56789
Added by Kristen T.
Step 1
Step 1: Calculate the expected return using the formula: Expected return = (Probability of return 1 * Return 1) + (Probability of return 2 * Return 2) Show more…
Show all steps
Your feedback will help us improve your experience
Pritesh Ranjan and 73 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
I own stock in IBM. This week, I estimate that there is a 40% chance that my stock will gain $800, a 10% chance that my stock will stay the same, and a 50% chance that it will lose $200. What is the expected value of my stock for this week? Just type in the whole number answer, without $ or any decimals.
Pritesh R.
You invest $3,000 in a stock that has a 10% chance of a 2% return, a 70% chance of a 6% return and a 20% chance of a 15% return. What is your expected return after one year? 7.4% 5.6% 6.0% 8.8%
James K.
The expected return on HiLo stock is 15.35 percent, while the expected return on the market is 12.4 percent. The beta of HiLo is 1.49. What is the risk-free rate of return? 2.95% 6.38% 3.19% 2.73% 7.87%
Adi S.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD