FinCorp Inc. conducted an extensive analysis of the economy and concluded that the probability of a recession

Question:

FinCorp Inc. conducted an extensive analysis of the economy and concluded that the probability of a recession next year is 35 percent, the probability of a boom is 45 percent, and the probability of a stable economy is 20 percent. Your boss has estimated that the price of PakCom Ltd. will be $60 if there is a recession, $110 if there is a boom and $85 if the economy is stable. Currently, PakCom is trading for $80. Calculate the ex ante on PakCom.

Expected Return
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...