Question

In 2000, Mr. Lowery's investment was worth $850. Every year after that, the value of his investment decreased at a rate of $50 each year.

Answer 1

The expected profit after one year of a $1,000 investment in stock, given the probabilities of loss, no change, and gain, is calculated to be $150.

Step-by-step explanation:

The student is asking to calculate the expected profit after one year of a $1,000 investment in stock with given probabilities for different outcomes. To find the expected profit, we use the formula:

Expected Profit = (Probability of Loss × Amount Lost) + (Probability of No Change × Amount with No Change) + (Probability of Gain × Amount Gained)

Substituting the given values:

Expected Profit = (0.35 × -$1,000) + (0.60 × $0) + (0.05 × $10,000)

Expected Profit = -$350 + $0 + $500

Expected Profit = $150

Therefore, the expected profit after one year is $150.