What Is the Expected Return on a Stock with a Guaranteed

question 186

Multiple Choice

What is the expected return on a stock with a guaranteed dividend of $3 if there is a 30-percent chance its price could rise by 50 percent, a 30-percent chance its price could fall by 50 percent, and a 40-percent chance its price could stay constant at the present price of $60 per share?

• A)$60
• B)$33
• C)$3
• D)$0
• E)-$27

---

Definitions:

Parasympathetic Nervous System

Part of the autonomic nervous system that conserves energy and restores the body to a state of calm.

Central Nervous System

The part of the nervous system comprising the brain and spinal cord, responsible for processing and sending out nervous signals.

General Adaptation Syndrome

A three-phase response pattern to stress described by Hans Selye, consisting of alarm, resistance, and exhaustion stages.

Alarm Reaction

The initial stage in the stress response, where the body prepares to fight or flee from perceived threats.