question archive You are considering buying stock A
You are considering buying stock A
Subject:FinancePrice:2.86 Bought3
You are considering buying stock A. If the economy grows rapidly, you may earn 25 percent on the investment, while a dedining economy could result in a 20 percent loss. Slow economic growth may generate a retum of 7 percent. If the probability is 16 percent for rapid growth, 30 percent for a declining economy, and 54 percent for slow growth, what is the expected return on this investment? Round your answer to one decimal place
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| p | R | E=p*R | ||
| Probability | Return(%) | Expected(%) | ||
| 0.16 | 25 | 4 | ||
| 0.30 | -20 | -6 | ||
| 0.54 | 7 | 3.78 | ||
| SUM | 1.78 | |||
| Expected Return on the investment | 1.78 | % |
