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16 November, 14:16

For an investment in a stock, the probability of the return being - 10.0% is 0.3, 10.0% is 0.4, and 30.0% is 0.3. given the probability distributions, what is the expected rate of return for the investment

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  1. 16 November, 14:46
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    The expected return will be given by:

    E (R) = Total sum of the expected return

    E (R) = - 0.1*0.3+0.1*0.4+0.3*0.3

    E (R) = - 0.03+0.04+0.09

    E (R) = 0.1=10%

    We therefore conclude that the expected return is 10%
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