Stocks X and Y have the following probability distributions of expected future returns:
Probability X Y 0.1 -10.0% -35.0% 0.2 2.0% 0.0% 0.4 12.0% 20.0% 0.2 20.0% 25.0% 0.1 34.0% 45.0% Calculate the expected rate of return,� , for Stock X
A. 12.20 B. 11.20 C. 12.00 D. 11.60
Ans : Option D, 11.6 %
Probability (A) | Stock X (B) | Stock Y © | Return(A*B) |
0.1 | -10% | -35% | -0.01 |
0.2 | 2% | 0% | 0.004 |
0.4 | 12% | 20% | 0.048 |
0.2 | 20% | 25% | 0.04 |
0.1 | 34% | 45% | 0.034 |
0.116 |
Stocks X and Y have the following probability distributions of expected future returns: Probability X Y...
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