An investment will return $125 , $20 or $negative 60 (a loss) with probabilities of 0.3 , 0.3 and 0.4 respectively. The expected return from this investment is $ ___. (Enter your response as a real number rounded to two decimal places.)

Question

Skylar Calderon

Business

5 April, 19:33

An investment will return $125 , $20 or $negative 60 (a loss) with probabilities of 0.3 , 0.3 and 0.4 respectively. The expected return from this investment is $ ___. (Enter your response as a real number rounded to two decimal places.)

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Answers (1)

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Jacey Petersen · Answer 1

The expected return from this investment is $19.5

Explanation:

Investment returns = A = $125 $20 - $60

Probabilities = P = 0.3 0.3 0.4

Expected Returns = A x P = $37.5 $6 - $24

Net Total interest of Investment = $37.5 + $6 + ( - $24)

Net Total interest of Investment = $37.5 + $6 - $24

Net Total interest of Investment = $19.5

The expected return from this investment is $19.5.