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

question 47

Multiple Choice

Use the following information to answer the question(s) below.

Nielson Motors (NM) has no debt. Its assets will be worth $600 million in one year if the economy is strong, but only $300 million if the economy is weak. Both events are equally likely. The market value today of Nielson's assets is $400 million.

-The expected return for Nielson Motors stock without leverage is closest to:

• A)-25.0%.
• B)-17.5%.
• C)-12.5%.
• D)12.5%.

---

Definitions:

Predictive Validity

The extent to which a score on a scale or test predicts future performance on some outcome measure.

Cultural Differences

Variations in practices, beliefs, and values among different societies or communities.

Assessing

The process of evaluating or estimating the nature, ability, or quality of something or someone.

Diagnosing

The process of identifying a disease or condition from its symptoms and clinical signs.