Calculate the expected return on an investment in Delta Inc.s stock if the probability distribution of returns

Question:

Calculate the expected return on an investment in Delta Inc.’s stock if the probability distribution of returns is as follows.

Return Probability

_5% ..............0.10

5 ..............0.25

10 ...............0.30

15 ...............0.25

25 ................0.10

Plot the distribution on the axes with Omega Inc. in the previous problem. Looking at the graph, which company has the lower risk/variance? If offered the choice between making an investment in Delta and in Omega Inc., which would most investors choose? Why?

Distribution
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The expected return is the profit or loss an investor anticipates on an investment that has known or anticipated rates of return (RoR). It is calculated by multiplying potential outcomes by the chances of them occurring and then totaling these...