Question

12) Assume that an investment is forecasted to produce the following returns: a 30% probability of a what is the 12% return; a 50% probability of a 16% return; and a 20% probability of a 19% return. expected percentage return this investment will produce? A) 16.1% B) 15.4% C) 33.3% D) 9.5%

Answer 1

expected percentage return :[return *probability]

              [12 *.30 ] +[16*.50 ]+[19*.20]

               3.6+ 8+ 3.8

                 = 15.4%

correct option is "B"