From following data find expected return from the Sharepossible returns-30-15015202530Probability0.050.10.10.150.250.20.15 Options :12.110.9813.7515.67
Question
From following data find expected return from the Share
possible returns-30-15015202530
Probability 0.050.10.10.150.250.20.15
Options : 12.1 10.98 13.75 15.67
Solution
To find the expected return from the given data, we need to multiply each possible return by its corresponding probability and then sum up the results.
Let's calculate the expected return step by step:
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Multiply each possible return by its corresponding probability:
- For the first option: 12.11 * 0.05 = 0.6055
- For the second option: 10.98 * 0.10 = 1.098
- For the third option: 13.75 * 0.10 = 1.375
- For the fourth option: 15.67 * 0.15 = 2.3505
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Sum up the results: 0.6055 + 1.098 + 1.375 + 2.3505 = 5.429
Therefore, the expected return from the given data is 5.429.
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