What Is the EMV for Option 2 in the Following

question 62

Multiple Choice

What is the EMV for Option 2 in the following decision table?
$$~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~{ \text { States of Nature } } \\\begin{array} { | l | c | c | } \hline \text { Alternatives } & \mathrm { S } _ { 1 } & \mathrm {~S} _ { 2 } \\\hline \mathrm { p } & .4 & .6 \\\hline \text { Option 1 } & 10,000 & 30,000 \\\hline \text { Option 2 } & 5,000 & 45,000 \\\hline \text { Option 3 } & -4,000 & 60,000 \\\hline\end{array}$$

• A) 5,000
• B) 21,000
• C) 25,000
• D) 29,000
• E) 45,000

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Definitions:

Annual Dividends

Payments made by a corporation to its shareholder members from its profits or reserves on a yearly basis.

Special Dividend

A one-time payment made by a company to its shareholders, usually in the form of cash, stocks or property, outside the regular dividend payments.

Required Return

The minimum return an investor expects to achieve by investing in a particular asset, taking into account the asset's risk.

Dividend Growth

The rate at which a company's dividend payments to shareholders increase over time, indicating the company's growth and stability.