2)Barbara is considering investing in a stock and is aware that the return on th

Question

2)Barbara is considering investing in a stock and is aware that the return on that investment is particularly sensitive to how the economy is performing. Her analysis suggests that four states of the economy can affect the return on the investment. Using the table of returns and probabilities below, find

Probability                 Return

Boom                          0.3                               25.00%

Good                           0.2                               15.00%

Level                           0.2                               10.00%

Slump                         0.3                               -5.00%

a) What is the expected return on Barbara

Explanation / Answer

E(Ri)

= 0.3

E(Ri)

= 0.3

Related Questions

Navigate

• Browse (All)
• Browse 2
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.