Ask Question
31 October, 04:58

your investment has a 20% chance of earning 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 7%. what is your expected return on investment

+2
Answers (1)
  1. 31 October, 08:41
    0
    8.9%

    Explanation:

    From the question above

    - The investment has 20% chance of earning 30% rate of return

    = 20/100

    Number or chances = 0.2

    - The investment has a 50% chance of earning 10% rate of return

    = 50/100

    Number of chances = 0.5

    - The investment has 30% chance of losing 7%

    = 30/100

    Number of chances = 0.3

    Therefore, the expected return on investment can be calculated as follows

    =0.2 (30) + 0.5 (10) + 0.3 (-7)

    =6 + 5 - 2.1

    = 11-2.1

    = 8.9%

    Hence the expected return on investment is 8.9%
Know the Answer?
Not Sure About the Answer?
Get an answer to your question ✅ “your investment has a 20% chance of earning 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing ...” in 📙 Business if there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers