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Security A: Probability 30% of Return 7%; Probability 50% of Return 12%; Probability of 20% of Return 17%. Security B: Probability 35% of Return 6%; Probability 65% of Return 16% What is the expected return for Security A

Respuesta :

Answer:

the expected return for security A is 11.50%

Explanation:

The computation of the expected return for security A is shown below:

The  Expected return for security A is

= Respective Return × respective probability

= (0.3 × 7) + (0.5 × 12) + (0.2 × 17)

= 11.50%

hence, the expected return for security A is 11.50%

We simply applied the above formula so that the correct value could come

And, the same is to be considered