E82 Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming

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E8–2 Four analysts cover the stock of Fluorine Chemical. One forecasts a 5% return for the coming year. The second expects the return to be negative 5%. The third predicts a 10% return. The fourth expects a 3% return in the coming year. You are relatively confident that the return will be positive but not large, so you arbitrarily assign probabilities of being correct of 35%, 5%, 20%, and 40%, respectively, to the analysts’ forecasts. Given these probabilities, what is Fluorine Chemical’s expected return for the coming year?

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Principles Of Managerial Finance

ISBN: 9780133546408

7th Edition

Authors: Lawrence J Gitman, Chad J Zutter

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