Question

In finance the notion of expected value is used to analyze investments for which the investor has an estimate of the chances associated with various returns (and losses). For example, suppose you have the following information about one of your investments: With a probability of 0.7, the investment will return 80 cents for every dollar you invest, and with a probability of 0.3, the investment will lose 70 cents for every dollar you invest. The expected rate of return for this investment is calculated the way we calculate the expected value of a game: Multiply the probability of each outcome by the amount you earn (or by minus the amount if you lose) and add up these numbers.

Calculate the expected rate of return for the investment described above. _________________%

Answer 1

Answer: Given that probability of the investment = 0.7 the investment will return 8o cent per every dolex mean 2018 probability of the investment =0.3 the investment will 6095 70 cent per every doller = 0-67 so. The Expected date of return = 0.7*0.8+ 0.3(-0.7) 0.56 -0.21 10.35 the mean for every dovas expected return is 35 cents - thank you