If a Stock Analyst Believes There Is a 25% Probability

question 34

Multiple Choice

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

Credits

In accounting, credits are entries that decrease assets or increase liabilities and equity on a company's balance sheet, corresponding to the double-entry bookkeeping system.

Debits

Entries made on the left-hand side of an account record in double-entry bookkeeping, indicating increases in assets or expense accounts, or decreases in liabilities, equity, or revenue accounts.

Account Balance

The amount of money present in a financial account at any given moment, which can be positive (credits) or negative (debits).

Chart of Accounts

An organized list of all the accounts in a company's general ledger, used for recording and reporting financial transactions.