Question: Suppose an investment is equally likely to have a 35 % return or a -20% return. The expected return for this investment is closest

Suppose an investment is equally likely to have a 35 % return

Suppose an investment is equally likely to have a 35 % return or a -20% return. The expected return for this investment is closest to: A. 10%. B. 15%. 55 C. 5%. OD. 7.5%. SEXLE

Step by Step Solution

★★★★★

3.43 Rating (150 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To find the expected returnwe consider both potential returns and th... View full answer

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!

Crossroads Car Wash: When Family and Finances Collide By Robert J. Rankin, Cassy Henderson, Trevor England, and Michael Opara Company Background Forty years ago, Juan Garcia and his wife, Maria,...

6.If a shed valued at $13,000 in the backyard is also destroyed in the fire, what is the maximum amount that the insurance company will pay, prior to the deductible, to replace the shed and any other...

You want to retire in 27 years, and you've decided you will deposit an equal amount in your account at the beginning of each month until you retire? If you want to have $4,200,000 in your account at...

The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...

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) Zoe Dental Implements has gross property, plant and equipment totaling $1.4 million, depreciation expense this year of $200,000, and accumulated depreciation last year of $550,000. What is Zoe's...

10) The price you would be willing to pay today for a share of Von Bora stock, if you plan to hold the stock for two years is closest to: Group of answer choices C) $21.95 D) $21.90 B) $20.65 A)...

1. Suppose an investment is equally likely to have a 35% return or a -20% return. The expected return for this investment is closest to: 10%. 15%. 7.5%. 5%. 2. Suppose an investment is equally likely...

Your firm is considering building a new office complex. Your firm already owns land suitable for the new complex. The current book value of the land is $100,000, however a commercial real estate...

You are considering making a movie. The movie is expected to cost $17.4 million upfront and take two year to make. After that, it is expected to make $11.2 million in the first year it is released...

Sale price is $90 per unit; direct material is $9 per unit; direct labor is $3 per unit, overhead is $6 per unit and $9,000 per month; selling and administrative expenses are $4 per unit and $22,000...

Mention the three perspectives of social entrepreneurship and explain each briefly. Must a social enterprise always have elements of all three perspectives?

Compared to manyfacturing systems, what is it about the enfronment of senvice operations that make them much harber seconal ? Murrele Ovoke Limted sapace Uncertainty and variablity Malturel marapemer...

What is it about tenacity that makes it such an important characteristic for entrepreneurs?

What is it about passion that makes it particularly compatible with the entrepreneurial process?

by AF= Ke, E *4 2 dr u 2 2. AF-Ke P

What are the four primary traits and characteristics of successful entrepreneurs?

Of the three primary reasons people become entrepreneurs, which one is given most commonly and why?

An association of real estate brokers that provides a pooling of listings, recent sales, and the sharing of commissions on a specified basis is called a(n):Local association of REALTORSAdvisory...

How can you interpret the difference between the cost of capital and the IRR?

If you own a call option at expiration and the stock price equals the strike price, is you profit zero?

What does a firm's cash cycle tell us?

How are the various costs that comprise cost of goods sold reflected in a "type of expenditure" format income statement?

Five factors are often mentioned as affecting a country's accounting practices: (a) legal system, (b) taxation, (c) providers of financing, (d) inflation, and (e) political and economic ties....

Cultural dimension index scores developed by Hofstede for six countries are reported in the following table: Required: Using Gray's hypothesis relating culture to the accounting value of secrecy,...