Answer: 35.71%
Explanation:
Value of assets sold and replaced(D) = Stock × Share price
= 600,000 × $25
= $15,000,000.
Value of all assets = (Stock × Share price) of A + (Stock × Share price) of B + (Stock × Share price) of C + (Stock × Share price) of D
= (200,000 × $35) + (300,000 × $40) + (400,000 × $20) + (600,000 × $25)
= $42,000,000
= 0.3571
= 35.71%
Answer:
Explanation:
40% probability that bond will be priced at $950
60% probability that bond will be priced at $1050
Expected value of the bond in one year:
(Probability*Price of bond) + (Probability * Callable price bond)= (0.4*$950)+(0.60*$1010)=$986
So, expected value is $986
If you have all your money in one investment or one area and that area ends up crashing you lose all your money.
If you are diversified you have your money across many investments in many different areas so if one or two crash you still have other investments you don't lose money in.