Assume the Probability of a Pessimistic, Most Likely and Optimistic

question 98

Multiple Choice

Assume the probability of a pessimistic, most likely and optimistic state of nature is .25, .55 and .20, and the returns associated with those states of nature are 5%, 10%, and 13% for asset Y.Based on this information, the expected return, standard deviation, and coefficient of variation for asset Y are:

• A)10.50%, 2.96% and 0.395 respectively
• B)10.35%, 2.86% and 0.345 respectively
• C)9.355%, 2.867.63% and 0.816315 respectively
• D)9.35%, 2.76% and 0.295 respectively
• E)none of the above

---

Definitions:

Non-Growth Firm

A business that does not expect to increase its revenue or expand its market share significantly over time.

Cash Positions

The amount of cash or cash-equivalents that a company or individual has available at any given time.

Aversion To Risk

Risk aversion is the preference to avoid uncertainty.

Cash Balances

The amount of available cash in a company's accounts at any given time, used to meet short-term obligations.