Question

HELP PLEASE ASAP

Answer 1

Answer: D. $3,450
Given: 2,500 shares of a stock bought for $8 a share
Probabilities:  the stock will rise to a value of $32 a share is 22%                                                  the stock will fall to $3 a share is 78%
Question: What is the expected value of the investor’s profit from buying the stock?
Solution: (22%(32-8)-78%(8-3))2500
                (.22(24)-.78(5))2500
                (5.28-3.9)2500
                (1.38)2500
                3450