Dota inc stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return and a 25% chance producing a 1

Question

AVprozaik [17]

3 years ago

8

Dota inc stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return and a 25% chance producing a 1

8%. What is the firm expected rate return?

Business

1 answer:

kaheart [24] · Answer 1 · 2022-08-01T21:29:07+03:00

The question is incomplete. Here is the complete question.

Dota inc stock has a 25% chance of producing a 30% return, a 50% chance of producing a 12% return and a 25% chance producing a -18%. What is the firm expected rate return?

Answer:

9%

Explanation:

Dora incorporation stock has a 25% chance of producing a 30% return

50% chance of producing a 12% return

25% chance of producing a -18% return

Therefore the firm's expected rate of return can be calculated as follows

= 25/100(30) + 50/100(12) + 25/100(-18)

= 0.25(30) + 0.50(12) + 0.25(-18)

= 7.5% + 6% - 4.5%

= 9%

Hence the firm's expected rate of return is 9%