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You Are Considering Buying a Share of Stock in a Firm

question 31

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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?


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Digital Natives

People who were born or brought up during the age of digital technology, thus are familiar with computers and the Internet from an early age.

Smartphone

A mobile phone offering advanced features beyond making calls and sending text messages, including internet access and various applications.

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Refers to individuals or families with low socioeconomic status, characterized by low income, education, and occupational status.

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The stage of education following primary education, typically including high school or equivalent levels, aimed at preparing students for higher education or vocational training.

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