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:

ATP

Adenosine triphosphate, a molecule that carries energy within cells for metabolism, acting as a primary energy currency in the cell.

ADP

ADP, or Adenosine Diphosphate, is a molecule involved in cellular metabolism. It is converted to ATP for energy storage by the addition of a phosphate group.

Molecule

Two or more atoms joined by chemical bonds.

PGA

An acronym that can refer to several concepts; in a biological context, it often stands for phosphoglyceric acid, a 3-carbon molecule formed in the Calvin cycle of photosynthesis.