If a Stock Analyst Believes There Is a 10% Probability

question 23

Multiple Choice

If a stock analyst believes there is a 10% probability that the stock price of Dymonatis will be $30 at the end of the year,a 50% probability that it will be $40,and a 40% probability that it will be $50,then the expected value of the stock at the end of the year is:

• A)$32.
• B)$38.
• C)$40.
• D)$43.

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Definitions:

Income

Monetary gain derived from work, investments, business, or other sources intended to fund personal expenditures.

Tax

A mandatory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.

Utility Function

A rephrased definition: A tool in economics to quantify an individual's satisfaction from consuming different bundles of goods and services.

Price

The sum of money needed to buy a product or service.