What Is the Expected Return on Security B

question 388

Multiple Choice

What is the expected return on security B?

• A) 8%
• B) 10%
• C) 11%
• D) 12.8%
• E) 13.8%

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Definitions:

Conditional Probabilities

The likelihood of an event or outcome occurring, given that another event has already occurred.

Optimistic Decision Maker

A decision-making style characterized by the tendency to expect the most favorable outcome.

Maximax Criterion

A decision-making rule used in scenarios of uncertainty, selecting the option with the maximum possible payoff regardless of the risks involved.

Uncertainty

A situation where the outcomes or conditions of an event, effect, or decision are not known or predictable.