On the advice of your financial advisor, you buy 50 shares of a company at the price

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On the advice of your financial advisor, you buy 50 shares of a company at the price of \(€ 17\) per share. She has told you that there is an \(80 \%\) probability that the stock price will increase to \(€ 25\) over the course of the next six months and a \(20 \%\) chance that the stock price will fall to \(€ 15\) per share. What is the expected value and the variance of your purchase?

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Microeconomics

ISBN: 9781292215624

8th Global Edition

Authors: Jeffrey Perloff

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