Toyota Stock Has the Following Probability Distribution of Expected Prices

question 5

Multiple Choice

Toyota stock has the following probability distribution of expected prices one year from now: $$\begin{array} { r c l } \text { State } & \text { Probability } & \text { Price } \\1 & 25 \% & \$ 50 \\2 & 40 \% & \$ 60 \\3 & 35 \% & \$ 70 \\\hline\end{array}$$ If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Toyota?

• A) 17.72%
• B) 18.89%
• C) 17.91%
• D) 18.18%

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Definitions:

Sample Size

The number of observations or items in a subset chosen from a larger population for the purpose of statistical analysis.

Error Level

The magnitude or frequency of mistakes or inaccuracies within a process, system, or document.

Confidence

The measure of certainty or belief in the effectiveness, quality, or reliability of something, often used in statistical analysis or personal assurance.

Sample Proportion

The fraction or percentage of observations from a particular category within a sample, used in statistics to make inferences about populations.