How much, on average, do you expect to gain by investing $4,120 in the following stock?...
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How much, on average, do you expect to gain by investing $4,120 in the following stock? To buy the stock, you have to pay a $120 nonrefundable service charge. There is a 60% chance that the firm will be bought by a large computer firm next year. If that is the case, there is a 50% chance that the stockholders will be bought out at double the present stock price and a 50% chance that the stockholders will be bought out at 150% of the present stock price. If the firm is not bought by the large company, there is a 50% chance that the firm's stock value will stay the same and a 50% chance that the firm will go broke. If the firm goes broke, its stock will be totally worthless. How much, on average, do you expect to gain by investing $4,120 in the following stock? To buy the stock, you have to pay a $120 nonrefundable service charge. There is a 60% chance that the firm will be bought by a large computer firm next year. If that is the case, there is a 50% chance that the stockholders will be bought out at double the present stock price and a 50% chance that the stockholders will be bought out at 150% of the present stock price. If the firm is not bought by the large company, there is a 50% chance that the firm's stock value will stay the same and a 50% chance that the firm will go broke. If the firm goes broke, its stock will be totally worthless.
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On average you expect to gain 10538 by investing 4120 in the stock This is because there is a 50 cha... View the full answer
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Managing Business Ethics Making Ethical Decisions
ISBN: 9781506388595
1st Edition
Authors: Alfred A. Marcus, Timothy J. Hargrave
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