2 Consider Stock B, which has three possible returns: +50 percent Oy: & -50%. The 3 possible retlims are…

2 Consider Stock B, which has three possible returns: +50 percent Oy: & -50%. The 3 possible retlims are…

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2 Consider Stock B, which has three possible returns: +50 percent Oy: & -50%. The 3 possible retlims are…
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2 Consider Stock B, which has three possible returns: +50
percent Oy: & -50%. The 3 possible retlims are equally prober
is the expected &
of
return for shock B?
Probability
A
0.25
0.25
0.25
0.25
(1)
Compute
0.10
0.05
0 20
0
the
0.15
O
0.25
10.05
expected
-0.5
0.10
-1.5
0.05
returns of
each stock?

Expert Answer:

Answer rating: 100% (QA)

To compute the expected return for each stock we need to multiply each return by its corresponding p
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