Use the Following Information to Answer the Question(s)below

question 52

Multiple Choice

Use the following information to answer the question(s) below.
If managed effectively,Rearden Metal will have assets with a market value of $200 million,$300 million,or $400 million next year,with each outcome being equally likely.Managers,however,may decide to engage in wasteful empire building,which will reduce Rearden's market value by $20 million in all cases.Managers may also increase the risk of the firm,changing the probability of each outcome to 50%,5%,and 45% respectively.
-What is the expected value of Rearden's assets if it were run efficiently?

• A)$265 million
• B)$280 million
• C)$295 million
• D)$300 million

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Definitions:

Gilded Age

A period in the late 19th century characterized by rapid industrialization, economic growth, and extravagant wealth contrasted with widespread poverty.

Sherman Antitrust Act

A landmark federal statute in the United States that prohibits monopolistic business practices.

Industrial Revolution

A period of major industrialization that took place during the late 1700s and early 1800s, transforming economies through the development of factories, railroads, and machinery, and shifting societies from agricultural to industrial.