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The Price of a Stock in One Year Has Been

question 13

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The price of a stock in one year has been assigned the following probability distribution: The price of a stock in one year has been assigned the following probability distribution:   What is the expected price of the stock? A) $24.16 B) $22.67 C) $21.40 D) $20.00 What is the expected price of the stock?


Definitions:

Risk-Free Rate

The return on investment with no risk of financial loss, traditionally associated with government bonds.

Expected Rate

The anticipated rate of return on an investment, often based on historical data or statistical analysis.

Market Risk Premium

The additional return investors expect for holding a risky market portfolio instead of risk-free assets.

Risk-Free Rate

The hypothetical return on a risk-free investment, typically illustrated by the interest earned on government securities.

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