Suppose Microsoft Stock Will Provide Either a Return of 10

question 56

Multiple Choice

Suppose Microsoft stock will provide either a return of 10 or 20 percent over the next year and that the probability of the former outcome is 0.25 while the probability of the latter is 0.75.If the utility an investor derives from a 10 percent return on Microsoft stock is 200 and the utility the investor derives from a 20 percent return is 400,the investor's expected utility from holding Microsoft stock is _____.

• A)300
• B)350
• C)250
• D)400

---

Definitions:

Inches

A unit of length in the imperial and U.S. customary measurement systems, equal to 1/12th of a foot or 2.54 centimeters.

Newborn

A baby from birth to about 2 months of age, during which rapid physical and cognitive development occurs.

Low Birth Weight

Refers to a newborn weighing less than 2,500 grams (5 pounds, 8 ounces) at birth, which may indicate health issues or risks.

Respiratory Distress Syndrome

A serious condition affecting newborns causing breathing difficulties due to underdeveloped lungs and lack of a surfactant.