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8.) There are three assets to be considered: stocks, bonds, and commodities. The current prices of...

8.) There are three assets to be considered: stocks, bonds, and commodities. The current prices of these assets are listed below:

Asset Current Price
Stocks $500
Bonds $1000
Commodities $200

The following table lists the possible prices of these assets a year from today, with the corresponding probabilities.

Stocks Bonds Commodities
  Probability       Price Probability Price    Probability Price
0.25 $700 0.4 $1100 0.2 $250
0.25 $650 0.6 $1050 0.25 $240
0.25 $600 0.25 $230
0.25 $550 0.3 $220

What is the expected return (in %) of stocks? Round your answer to at least 2 decimal places.

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Answer #1

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The expected return of stocks is $ 625 %

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