Samuel just purchased one IBM stock share for 16 dollars. IBM stock price has a 20% chance to be 5, a 30% chance to be 25, and a 50% chance to be 6 next year. What is Samuel's expected return (report the return as a decimal number with four decimal places such as 0.0665) from holding the IBM share for one year?

Samuel just purchased one IBM stock share for 16 dollars. IBM stock price has a 20% chance to be 5, a 30% chance to be 25, and a 50% chance to be 6 next year. What is Samuel's expected return (report the return as a decimal number with four decimal places such as 0.0665) from holding the IBM share for one year?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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