Use the Following Information to Answer the Question(s) Below

question 104

Multiple Choice

Use the following information to answer the question(s) below.
If managed effectively, Rearden Metal will have assets with a market value of $200 million, $300 million, or $400 million next year, with each outcome being equally likely. Managers, however, may decided to engage in wasteful empire building, which will reduce Rearden's market value by $20 million in all cases. Managers may also increase the risk of the firm, changing the probability of each outcome to 50%, 5%, and 45% respectively.
-Suppose that the managers at Rearden Metal will increase risk to maximize the expected payoff to equity holders.If Rearden has $180 million in debt due in one year,then the expected value of Rearden's assets are closest to:

• A) $280 million
• B) $295 million
• C) $300 million
• D) $900 million

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Definitions:

Cholesterol Levels

Measurements of the total amount of cholesterol in the blood, including HDL (good) cholesterol and LDL (bad) cholesterol, important for assessing heart disease risk.

Arteries

Blood vessels that carry oxygenated blood away from the heart to the body's tissues.

Fasting

Voluntarily abstaining from all or some kinds of food or drink for a specified period.

Normal Range

The set of values that is considered typical or healthy for a specific measurement or test in the general population.