Food Delivery Services (FDS) share price is worth $18 today. In a year, the market for...

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Food Delivery Services (FDS) share price is worth $18 today. In a year, the market for meal prep delivery could expand and FDS could gain market share leading to a price of $25 per share with probability of 30%. The market could expand leading to a price of $20 per share with this being the most likely at a probability of 45%. The market could not have the expected uptake leading to a price of $16 with a probability associated with this state of 25%. No dividends are expected. What is the expected return of this stock and what is the volatility of the stock's return? Food Delivery Services (FDS) share price is worth $18 today. In a year, the market for meal prep delivery could expand and FDS could gain market share leading to a price of $25 per share with probability of 30%. The market could expand leading to a price of $20 per share with this being the most likely at a probability of 45%. The market could not have the expected uptake leading to a price of $16 with a probability associated with this state of 25%. No dividends are expected. What is the expected return of this stock and what is the volatility of the stock's return?

Answer rating: 100% (QA)

To calculate the expected return of the stock we need to take into account the potential prices of t... View the full answer