Use the Information for the Question(s) Below

question 24

Multiple Choice

Use the information for the question(s) below.
Consider an economy with two types of firms, S and U. S firms always move together, but U firms move independently of each other. For both types of firms there is a 70% probability that the firm will have a 20% return and a 30% probability that
the firm will have a -30% return.
-What is the expected return for an individual firm?

• A) 3%
• B) 5%
• C) -5%
• D) 14%

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Definitions:

Salaries Expense

The total amount of salary payments made to employees, recognized as an expense in the accounting period in which the employees' services are rendered.

Office Salaries

Office Salaries refer to the compensation provided to employees who perform administrative duties within an office.

Accounts Payable

Money owed by a company to its suppliers or creditors for goods and services received but not yet paid for.

Explanations

Detailed accounts or statements clarifying or justifying something.