If a Stock Analyst Believes There Is a 25% Probability

question 120

Multiple Choice

If a stock analyst believes there is a 25% probability that the stock price of Dymonatis will equal $30 at the end of the year, a 50% probability that it will equal $40, and a 25% probability that it will equal $50, then the expected value of the stock at the end of the year is:

• A)$30.
• B)$35.
• C)$40.
• D)$50.

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Definitions:

Patent Account

An account on the balance sheet that represents the value of patents a company owns, which are intangible assets.

Net Adjustment

Modifications made to the net income or net loss of a company to reconcile with cash flow or other financial statements.

Unamortized Patent

The cost of a patent that has not yet been gradually written off against profits over its useful life.

Equity Income

Income earned by an investor through dividends or distributions from equity investments or ownership interests in companies.