Question: An investment manager analyses a security and determines that it has three possible return outcomes over the next 12 months; -3.5%, 8.5% and 15.6%, for

  1. An investment manager analyses a security and determines that it has three possible return outcomes over the next 12 months; -3.5%, 8.5% and 15.6%, for which she has assigned the following probabilities of occurring; 15%, 65% and 20% respectively. If the security is presently priced at $104.16, to what price does the manager expect to stock to be in 12 months time?

    a

    $112.62
    b

    8.1%
    c

    $71.52
    d

    $111.31

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