Freedman Flowers' Stock Has a 50% Chance of Producing a 25

question 119

Multiple Choice

Freedman Flowers' stock has a 50% chance of producing a 25% return,a 30% chance of producing a 10% return,and a 20% chance of producing a -28% return.What is the firm's expected rate of return?

• A) 9.41%
• B) 9.65%
• C) 9.90%
• D) 10.15%
• E) 10.40%

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Definitions:

Cash Flow

The net amount of cash and cash-equivalents being transferred in and out of a business, crucial for its liquidity, solvency, and financial flexibility.

Language Of Finance

The specific jargon, terms, and concepts used in the finance industry to communicate financial information and decisions.

Proprietor Form

A business structure owned by a single individual, where the owner and the business are legally the same entity.

Double Taxation

The imposition of taxes on the same income, asset, or financial transaction at two different levels of government, often seen in the taxation of corporate profits and then again when dividends are paid to shareholders.