Consider the following probability distrībution of retums for Alpha Corporation: Current Stock Stock Price in Probability PR Price ($) One Year ($) Return R $35 40% 0% 25% $25 $25 50% $20 -20% 25% The expected return for Alpha Corporation is closest to: O a. 6.67%. O b. 10%. O c. 5.00%. O d. 0.00%.

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 17P
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Consider the following probability distribution of retums for Alpha Corporation:
Current Stock Stock Price in
Probability
Price ($)
One Year ($)
Return R
PR
$35
40%
25%
$25
$25
0%
50%
$20
-20%
25%
The expected return for Alpha Corporation is closest to:
O a. 6.67%.
O b. 10%.
O c. 5.00%.
O d. 0.00%.
Transcribed Image Text:Consider the following probability distribution of retums for Alpha Corporation: Current Stock Stock Price in Probability Price ($) One Year ($) Return R PR $35 40% 25% $25 $25 0% 50% $20 -20% 25% The expected return for Alpha Corporation is closest to: O a. 6.67%. O b. 10%. O c. 5.00%. O d. 0.00%.
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