Question

Security A: Probability 30% of Return 7%; Probability 50% of Return 12%; Probability of 20% of Return 17%. Security B: Probability 35% of Return 6%; Probability 65% of Return 16% What is the expected return for Security A

Answer 1

the expected return for security A is 11.50%

Step-by-step explanation:

The computation of the expected return for security A is shown below:

The Expected return for security A is

= Respective Return × respective probability

= (0.3 × 7) + (0.5 × 12) + (0.2 × 17)

= 11.50%

hence, the expected return for security A is 11.50%

We simply applied the above formula so that the correct value could come

And, the same is to be considered