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30. Seattle Best Company common stock is currently selling for $20 per share. Security analysts at Goldman Sachs have assigned the following probability distribution to
30. Seattle Best Company common stock is currently selling for $20 per share. Security analysts at Goldman Sachs have assigned the following probability distribution to the price of (and rate of return on) Seattle Best stock one year from now:
Price Rate of Return Probability $16 -20% 0.25 $20 0% 0.30 $24 +20% 0.25 $28 +40% 0.20 Assuming that Seattle Best is not expected to pay any dividends during the coming year, determine the expected rate of return on Seattle Best stock.
A. 8.25%
B. 8.00%
C. 20.90%
D. 40.00
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