Use the following information,which describes the possible outcomes from investing in a particular asset,to answer the following question(s).

-What is the expected return on an investment that has the following expected scenario? If there is a 10% probability of a booming economy,$250 return;if there is a 70% probability of a moderate economy,$154 return;if there is a 20% probability of a declining economy,$50 return.
A)$154.00
B)$142.80
C)$65.00
D)$15.12

Question

Use the following information,which describes the possible outcomes from investing in a particular asset,to answer the following question(s).
 
-What is the expected return on an investment that has the following expected scenario? If there is a 10% probability of a booming economy,$250 return;if there is a 70% probability of a moderate economy,$154 return;if there is a 20% probability of a declining economy,$50 return.
A)$154.00 
B)$142.80 
C)$65.00 
D)$15.12

Quizplus · Accepted Answer

The expected return is calculated by multiplying each scenario's return by its probability and summing the results: (0.10 * $250) + (0.70 * $154) + (0.20 * $50) = $25 + $107.80 + $10 = $142.80.

Use the Following Information,which Describes the Possible Outcomes from Investing