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

question 47

Multiple Choice

Use the following information to answer the question(s) below.

Nielson Motors (NM) has no debt. Its assets will be worth $600 million in one year if the economy is strong, but only $300 million if the economy is weak. Both events are equally likely. The market value today of Nielson's assets is $400 million.

-The expected return for Nielson Motors stock without leverage is closest to:

• A)-25.0%.
• B)-17.5%.
• C)-12.5%.
• D)12.5%.

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Definitions:

Leu-Glu-Lys

A tripeptide composed of the amino acids leucine, glutamic acid, and lysine, often studied in biochemistry and molecular biology.

Leucine

An essential amino acid used by the body in protein synthesis and various metabolic processes.

Glutamic Acid

An amino acid that is critical for proper brain function and metabolism, and serves as a neurotransmitter.

Lysine

An essential amino acid required for growth and tissue repair, crucial in the production of various enzymes and hormones.