1.How much, on average, do you expect to gain by investing $4,120 in the following stock?

To buy the stock, you have to pay a $120 nonrefundable service charge. There is a 50% chance that the firm will be bought by a large computer firm next year. If that is the case, there is a 40% chance that the stockholders will be bought out at double the present stock price and a 60% chance that the stockholders will be bought out at 150% of the present stock price. If the firm is not bought by the large company, there is a 50% chance that the firm's stock value will stay the same and a 50% chance that the firm will go broke. If the firm goes broke, its stock will be totally worthless.

2.On the average, how much would you expect to win by playing a game with a 50% chance to win $4,000, a 30% chance to lose $1,000, and a 20% chance to lose $2,000?