Final answer:
To find the expected profit from investing $1,000 in stock, probabilities of different outcomes are multiplied with their corresponding values and then summed. In this case, the expected profit is $150 after one year.
Step-by-step explanation:
To calculate the expected profit of investing $1,000 into stock, we need to use probabilities for the possible outcomes and their associated values. The expected profit (E) is calculated by the formula E = (probability of event 1) × (value of event 1) + (probability of event 2) × (value of event 2) + ... + (probability of event n) × (value of event n). For the given scenario, we have:A 35% chance of losing $1,000, which gives us (0.35 × -$1,000) = -$350.A 60% chance of no profit or loss, so (0.60 × $0) = $0.A 5% chance of making a profit of $10,000, which is (0.05 × $10,000) = $500.Adding these together, the expected profit is -$350 + $0 + $500 = $150. Thus, the expected profit is $150 after one year.