contestada

). Your investment has a 20% chance of earning a 40% rate of return, a 70% chance of earning a 20% rate of return and a 10% chance of losing 4%. What is your expected return on this investment?

Respuesta :

Kolawole845

Answer:

Expected return = 22%

Explanation:

The expected return on investment is the weighted average of all the return from different possible outcomes weighted according to the probability of each outcome.

           Return         Probability     P× R

A           40%           0.2             =      0.08

B           20%           0.7                =       0.14

C           -4%           0.1              =     -0.004

Expected return = 0.08 + 0.14 + -0.004

                         =  0.216 × 100

                        = 22%

Expected return   = 22%

Otras preguntas