If Microsoft Stockholders Expect Either a 25% Return or a 2

question 42

Multiple Choice

If Microsoft stockholders expect either a 25% return or a 2% return,each with a 50% probability,and Apple Computer shareholders expect a 10% return with certainty,what is the expected return from a portfolio comprised of equal amounts of stock from both firms?

• A) 37.00%
• B) 23.50%
• C) 11.75%
• D) 10.75%
• E) 12.33%

---

Definitions:

Safety Stock

Extra stock to allow for uneven demand; a buffer.

Continuous Improvement

A continuous commitment to enhance products, services, or processes through minor, step-by-step changes gradually.

Respect for People

A principle in leadership and management emphasizing the importance of treating all individuals with dignity, considering their needs and contributions.

Standard Work Practices

Standard work practices refer to the set of procedures and guidelines designed to consistently achieve optimal performance, quality, and safety in an organization's operations.