Question: (1) Consider the following probability distribution of returns for Alpha Corporation Current Stock Price (S) Stock Price in One Year (S) $35 $25 $20 Return

(1) Consider the following probability distribution of returns for Alpha Corporation

(1) Consider the following probability distribution of returns for Alpha Corporation Current Stock Price (S) Stock Price in One Year (S) $35 $25 $20 Return R 40% 0% -20% Probability PR 25% 50% 25% S25 The expected return for Alpha Corporation is closest to A) 6.67% B) 5.00% c) 10% D) 0.00% Answer: B Explanation : B) EIRI = PR x R = .25(40%) + .50(0%) + .25(-20%) = 5%

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

4. Use the table for the question(s) below. Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price Stock Price in One Year Probabili (S) (S) Return R ty...

Use the table for the question(s) below. Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR...

1. Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR $35 40% 25% $25 $25 0% 50% $20 -20%...

Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR $35 40% 25% $25 $25 0% 50% $20 -20% 25%...

Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price ($) Stock Price in One Year ($) Return R Probability PR $25 $35 40% 25% $25 0% 50% $20 -20% 25%...

1. Use the following information to answer the question(s) below. Suppose that the market portfolio is equally likely to increase by 24% or decrease by 8%. Security "X" goes up on average by 29% when...

QUESTION 1 Consider the following probability distribution of returns for Alpha Corporation: Current Stock Price (S Stock Price in One Year (S) Return RProbability PR 40% 096 20% 25% 50% 25% $25 The...

The two amines shown differ by a factor of 40,000 in their Kb values. Which is the stronger base? Why? View their structures on Learning By Modeling. What are the calculated charges on the two...

Given the following information, calculate the sales units and dollars needed to achieve the desired after-tax profit of $12,000; tax rateof 40%; fixed cost $30,000; variable cost 50%; selling price...

If a firm had sales of $ 5 1 , 0 0 0 during a period and sales returns and allowances of $ 4 , 5 0 0 , its net sales were: Multiple Choice $ 4 6 , 5 0 0 . $ 5 5 , 5 0 0 .

Required information [The following information applies to the questions displayed below.] Diego Company manufactures one product that is sold for $75 per unit in two geographic regions-the East and...