Fire and Ice Corp.'s stock has an 18% chance of producing a 30% return, a 55%...

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Fire and Ice Corp.'s stock has an 18% chance of producing a 30% return, a 55%...

Fire and Ice Corp.'s stock has an 18% chance of producing a 30% return, a 55% chance of producing a 12% return, and a 27% chance of producing a −18% return. What is the firm's expected rate of return? (Provide your answer as a decimal to the 4th decimal place)

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Answer 1

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probability Returns Expected return (Return x probability) 30% 18% 0.05 12% 55% 0.07 -18% 27% -0.05 0.0714 Expected return

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