If a Plaintiff Believes There Is a 50 Percent Chance

question 128

Multiple Choice

If a plaintiff believes there is a 50 percent chance they will win $250,000 and a 50 percent chance they will win nothing (zero) , and the litigation cost is $50,000, what is the expected value of the litigation for the plaintiff?

• A)$75,000
• B)$125,000
• C)$50,000
• D)$175,000

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Definitions:

Fair Value

The price that would be received for selling an asset or paid to transfer a liability in an orderly transaction between market participants.

Equity Securities

Financial instruments indicating ownership in a company, such as stocks, which may offer dividends and voting rights.

Strategic Investments

Strategic Investments are long-term investments made by a company in other companies or assets to further its business objectives and gain competitive advantages.

Trading Investments

Securities that a company buys and holds primarily for the purpose of selling them in the near term to generate income.