Use the Information for the Question(s)below

question 89

Multiple Choice

Use the information for the question(s) below.
If it is managed efficiently,Luther Industries will have assets with market value of $100 million,$300,million,or $500 million next year,with each outcome being equally likely.Managers may,however,engage in wasteful empire building which will reduce the firm'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%,20%,and 30% respectively.
-If its managers engage in empire building,then the expected market value of Luther's assets is closest to:

• A)$260 million.
• B)$280 million.
• C)$240 million.
• D)$300 million.

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Definitions:

Apartment Complex

A large building or series of buildings containing multiple apartment units, typically owned by a single entity.

In-state Residents

Individuals who live within the geographical boundaries of a particular state and are often eligible for benefits or rates not available to non-residents.

Quota Sampling

A non-probability sampling technique where individuals or elements are selected based on specific traits or characteristics until a quota is met.

Nonrandom Component

The portion of variability in data that is attributable to specific, deterministic causes, as opposed to random variation.