A Company Believes That There Is a 25% Chance of Making

question 18

Essay

A company believes that there is a 25% chance of making a daily profit of $500, a 35% chance that it will be $1000 and 40% chance that it will be $1500.
a. Find the expected value.
b. Find the standard deviation.

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Definitions:

Common Stockholders

Individuals or entities that own shares in a company's common stock, giving them voting rights and a potential share of the company's profits through dividends.

Preferred Stockholders

Investors who own shares of preferred stock, with claim to dividends and assets in the event of liquidation prior to common stockholders, often without voting rights.

Expected Rate

The anticipated return or yield on an investment or the forecasted growth rate of a variable such as inflation or economic growth.

Interest Rate

The cost of borrowing money or the return for investing money, typically expressed as a percentage of the principal.