Consider the Following Discrete Probability Distributions of Payoffs for 3

question 23

Multiple Choice

Consider the following discrete probability distributions of payoffs for 3 securities that are held in a DI's trading portfolio (payoff amounts shown are in $millions) : $$\begin{array} { | l | l | l | } \hline \text { SECURITY } & \text { PROBABILITY } & \text { PAYOFF } \\\hline \text { Alpha } & 0.50 & 355 \\\hline & 0.49 & 150 \\\hline & 0.01 & - 300 \\\hline\end{array}$$ $$\begin{array} { | l | l | l | } \hline \text { SECURITY } & \text { PROBABILITY } & \text { PAYOFF } \\\hline \text { Beta } & 0.50 & 400 \\\hline & 0.49 & 150 \\\hline & 0.0025 & - 300 \\\hline & 0.0075 & - 3,300 \\\hline\end{array}$$ $$\begin{array} { | l | l | l | } \hline \text { SECURITY } & \text { PROBABILITY } & \text { PAYOFF } \\\hline \text { Gamma } & 0.49 & 400 \\\hline & 0.49 & 150 \\\hline & 0.01 & - 150 \\\hline & 0.01 & - 2.000 \\\hline\end{array}$$ What are the expected returns for securities Alpha and Beta, respectively (in millions) ?

• A)?$248 and +$248
• B)+$248 and +$248
• C)?$300 and +$400
• D)+$300 and ?$3,300
• E)none of the options

---

Definitions:

KeyCite

A citation research service used to check the legal precedent status, helping identify if a case, statute, regulation, or administrative decision has been overturned, reaffirmed, questioned, or cited by later cases.

Status Flag

A marker or an indicator often used in databases or software to represent the current status or condition of an item, record, or process.

Westlaw

A widely used online legal research service and database that provides access to case law, statutes, treaties, and legal periodicals for attorneys and legal professionals.

Lexis

A comprehensive computerized legal research service providing access to a vast library of legal texts, statutes, and case law.