Compute Expected Values: Paul Jones is considering two investment alternatives. He can buy Treasury bills, which have a guaranteed 10 percent return, or he can invest his money in a company stock with the following schedule of returns and probabilities.

Required: What is the expected return on the company stock that he is considering buying? Does it have a higher expected return than the 10 percent expected on Treasury bills?

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Return on Stock Probability -4% 2 5 10 12 15 20 25 30 88284088 .05 .05 .10 .30 .15 .15 .10 .05 .05