Question

Vandelay Industries stock has a 50% chance of producing a 20% return, a 30% chance of producing a 8% return, and a 20% chance of producing a -21% return. What is Vandelay expected rate of return?

Answer 1

Answer:

8.2%

Explanation:

Calculation to determine the expected rate of return

Expected rate of return= (.50 (.20)) +(.30(.08)) + (.20*(-.21)

Expected rate of return=0.1+0.024+(0.042)

Expected rate of return=.082*100

Expected rate of return=8.2%

Therefore the expected rate of return is 8.2%