You Are Considering Buying a Share of Stock in a Firm

question 31

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 $50.00.You forecast that there is a 40% chance that the stock will sell for $70.00 at the end of one year.The alternative expectation is that there is a 60% chance that the stock will sell for $30.00 at the end of one year.What is the expected percentage return on this stock,and what is the return variance?

• A)-8.00%,15.36%
• B)4.00%,30.72%
• C)8.00%,15.36%
• D)-4.00%,-30.72%

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Definitions:

Introverts

Introverts are individuals who tend to prefer solitary activities and feel drained by social interactions, compared to extroverts who are energized by socializing.

Impulsive

Characterized by actions taken without forethought or consideration of the consequences, often driven by immediate desires.

Introvert

An individual who primarily focuses on internal thoughts and feelings rather than seeking external stimulation.

Sensitivity

The capacity to perceive and process emotional cues and subtleties in one's environment.