The Probabilities of Different Returns on a Stock Over the Year

question 95

Multiple Choice

The probabilities of different returns on a stock over the year are: $$\begin{array} {cc } \text { Probability } & \text { Return } \\10 \% & - 5 \% \\15 \% & 0 \% \\20 \% & 5 \% \\30 \% & 10 \% \\25 \% & 20 \%\end{array}$$
The expected return on the stock is_____ percent.

• A)8.5
• B)9.0
• C)9.5
• D)10.0

---

Definitions:

Loss-Minimizing

A strategy or point where a firm attempts to reduce its losses to the lowest possible level when it cannot achieve profitability.

Efficient Output Level

The quantity of production that maximizes a firm's profit by equating marginal cost and marginal revenue.

Units

A standard quantity or amount used as a measure of a physical quantity, such as length, mass, or time.

Monopolistic Competitor

A type of market structure where many firms offer products that are similar but not identical, allowing for some degree of market power and product differentiation.