Coca Cola Stock Has the Following Probability Distribution of Expected

question 81

Multiple Choice

Coca Cola stock has the following probability distribution of expected prices one year from now: $\begin{array} { c c c } \text { state } & \text { Probability } & \text { Price } \\1 & 25 \% & \$ 50 \\2 & 404 & \$ 60 \\3 & 35 \% & \$ 70\end{array}$ If you buy Coca Cola today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Coca Cola?

• A) 17.72%
• B) 18.89%
• C) 17.91%
• D) 18.18%

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Definitions:

Quantity Discounts

Price reductions applied to bulk purchases, incentivizing buyers to increase the volume of their purchase.

Annual Carrying Costs

The total expenses associated with holding or storing inventory over a year, including costs related to storage, insurance, and obsolescence.

Ordering Costs

Expenses associated with making an order for goods or services, including administrative costs, shipping charges, and time spent on ordering processes.

Carrying Costs

Expenses associated with holding inventory, including storage, insurance, and obsolescence.