You Are Considering Buying a Share of Stock in a Firm

question 106

Multiple Choice

You are considering buying a share of stock in a firm that has the following two possible payoffs with the corresponding probability of occurring.The stock has a purchase price of $15.00.You forecast that there is a 30% chance that the stock will sell for $30.00 at the end of one year.The alternative expectation is that there is a 70% chance that the stock will sell for $10.00 at the end of one year.What is the expected percentage return on this stock,and what is the return variance?

• A)6.67%,9.17%
• B)1.00%,93.50%
• C)6.67%,37.33%
• D)84.00%,$9.67

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Definitions:

Rose Window

A circular stained-glass window.

Flying Buttress

A specific form of buttressing most strongly associated with Gothic church architecture, allowing walls to be higher and thinner by counteracting the outward force of the roof vaults.

Romanesque Counterparts

Refers to architectural or artistic elements that resemble the Romanesque style, characterized by semi-circular arches, robust structure, and extensive decoration.

Chartres Cathedral

A Gothic cathedral located in Chartres, France, renowned for its architectural innovation and the preservation of its stained glass windows.