This topic contains a solution. Click here to go to the answer
« previous next »

Author Question: Given the expected returns and probabilities of various states of the world in this table, what is ... (Read 26 times)

tatyanajohnson

  • Hero Member
  • *****
  • Posts: 569
on: Jul 10, 2018
Given the expected returns and probabilities of various states of the world in this table, what is the expected return for Carbide Company?
 
  Carbide Company
  State of the Economy Probability of State Return on State
  Boom .30 18
  Steady .55 10
  Recession .15 -5
 
  A) 10.15
  B) 5.40
  C) 5.50
  D) -0.75

Question 2

Andre is considering an investment in Bristol Inc. and has gathered the following information. What is the expected return for a share of the firm's stock?
 
  State of the Economy Probability of the
  State Conditional Expected Return
  Bristol Inc.
  Recession .20 -10
  Steady .50 10
  Boom .30 45
 
  A) 45.00
  B) 65.00
  C) 16.50
  D) 15.00


Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
Marked as best answer by a Subject Expert

Jbrasil

  • Sr. Member
  • ****
  • Posts: 337
Reply #1 on: Jul 10, 2018
Answer to Question 1

Answer: A
Explanation: A) Expected payoff =  payoffi  probabilityi = .30  18 + .55  10 + .15  -5 = 10.15

Answer to Question 2

Answer: C
Explanation: C) Expected payoff =  payoffi  probabilityi = .20  -10 + .50  10 + .30  45 = 16.50.


tatyanajohnson

  • Member
  • Posts: 569
Reply 2 on: Jul 10, 2018
Gracias!

anyusername12131

  • Member
  • Posts: 327
Reply 3 on: Yesterday
Wow, this really help

« previous next »
 

Did you know?

Most strokes are caused when blood clots move to a blood vessel in the brain and block blood flow to that area. Thrombolytic therapy can be used to dissolve the clot quickly. If given within 3 hours of the first stroke symptoms, this therapy can help limit stroke damage and disability.

Did you know?

Cancer has been around as long as humankind, but only in the second half of the twentieth century did the number of cancer cases explode.

Did you know?

People with alcoholism are at a much greater risk of malnutrition than are other people and usually exhibit low levels of most vitamins (especially folic acid). This is because alcohol often takes the place of 50% of their daily intake of calories, with little nutritional value contained in it.

Did you know?

During pregnancy, a woman is more likely to experience bleeding gums and nosebleeds caused by hormonal changes that increase blood flow to the mouth and nose.

Did you know?

Asthma is the most common chronic childhood disease in the world. Most children who develop asthma have symptoms before they are 5 years old.

Bilingualism in the United States Bilingualism in the United States
Links to the World Economy Links to the World Economy
How to create a frequency table and histogram from raw data How to create a frequency table and histogram from raw data
World Crude Oil Production, 1900–2010 World Crude Oil Production, 1900–2010
A History of the World's Religions A History of the World's Religions
Table - Correlation Analysis Table - Correlation Analysis
Video: Carbohydrate digestion (brush border enzymes, end products) & Carb absorption (fructose, galactose)

For a complete list of videos, visit our video library