Given the following probability distribution, what is the expected return of security J? (Expresss your answer...

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Question

Given the following probability distribution, what is the expected return of security J? (Expresss your answer...

Given the following probability distribution, what is the expected return of security J? (Expresss your answer in percentage and round it two decimal places, but do not include the percent sign, %, i.e., 4.65)

State	Prob_i	r_J
Bad	0.3	6%
Neutual	0.3	14%
Good	0.4	19%

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Answer 1

Answer #1

expected return=Respective return*Respective probability

=(0.3*6)+(0.3*14)+(0.4*19)

which is equal to

=13.6

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Answer 2

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