TABLE 17-4
a Stock Portfolio Has the Following Returns

question 45

Multiple Choice

TABLE 17-4
A stock portfolio has the following returns under the market conditions listed below.
$$\begin{array} { c c c } \text { Market Condition } & \text { Probability } & \text { Return } \\\hline \text { Bull } & 0.4 & \$ 200 \\\text { Stable } & 0.3 & \$ 100 \\\text { Bear } & 0.3 & - \$ 100\end{array}$$
-Referring to Table 17-4, what is the EMV?

• A) $80
• B) $90
• C) $130
• D) $180

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Definitions:

Economic Expansion

A phase of the business cycle where the economy grows and increases in activity, marked by rising GDP, employment, and income.

EBIT

Earnings Before Interest and Taxes; a measure of a firm's profitability that includes all expenses except interest and income tax expenses.

Unlevered Firm

A company that operates without any debt financing, relying solely on equity for its financing needs.

Levered

Pertaining to the use of borrowed capital or debt to increase the potential return of an investment.