Phoenix Company Common Stock Is Currently Selling for $20 Per

question 30

Multiple Choice

Phoenix Company common stock is currently selling for $20 per share. Security analysts at Smith Blarney have assigned the following probability distribution to the price of (and rate of return on) Phoenix stock one year from now: $$\begin{array} { l l l } \text { Price } & \text { Rate of Return } & \text { Probability } \\\$ 16 & - 20 \% & 0.25 \\\$ 20 & 0 \% & 0.30 \\\$ 24 & + 20 \% & 0.25 \\\$ 28 & + 40 \% & 0.20\end{array}$$ Assuming that Phoenix is not expected to pay any dividends during the coming year, determine the expected rate of return on Phoenix Stock.

• A) 8%
• B) 0%
• C) 10%
• D) 40%

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Definitions:

Human Talent

The natural aptitudes and learned abilities that individuals possess, enabling them to perform certain tasks effectively.

Operating Objectives

Specific, measurable goals that an organization aims to achieve in its day-to-day operations to support its overall strategic objectives.

Financial Health

A measure of the financial stability and viability of an individual, organization, or economy, often assessed through factors like liquidity, debt levels, and profitability.

Market Share

The percentage of total sales or revenue within an industry generated by a particular company, indicating the company's strength in the market relative to its competitors.