Use the Information for the Question(s)below

question 11

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 it is managed efficiently,then the expected market value of Luther's assets is closest to:

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

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Definitions:

Expectancy

The belief that one's effort will lead to attainment of desired performance goals.

Particular Level

A specific degree or stage in a process or hierarchy; often used to denote a focused or detailed layer within a broader context.

Second-level Outcome

Refers to indirect or subsequent effects that result from primary actions or interventions in a process or system.

Valence

The intrinsic attractiveness or averseness of an event, object, or situation, as perceived by individuals.