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If a Stock Analyst Believes There Is a 10% Probability

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If a stock analyst believes there is a 10% 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 40% probability that it will be $50,then the expected value of the stock at the end of the year is:


Definitions:

Price-Taker Market

A market situation where sellers or buyers have no influence on the price of a product or service, taking the market price as given.

Market Price

The current price at which a good or service can be bought or sold on the open market, determined by the forces of supply and demand.

Total Market

The entire demand for a certain product or service, inclusive of all segments and types of consumers within a market.

Price Searchers

Firms or individuals who actively seek out and compare prices in an effort to find the most favorable market conditions.

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