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

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Definitions:

6 Weeks

A specific time period often used in various contexts, such as the typical healing time for minor medical conditions or the length of some psychological treatment programs.

3 Weeks

A time period equivalent to 21 days, often used to describe the duration of events, processes, or the onset of symptoms.

3 Months

A time period equivalent to approximately 90 days or one quarter of a year.

Early Adulthood

A life stage occurring after adolescence, typically characterized by independence, the pursuit of a career, and for many, forming a family.