4 Financial Mgmt

We use the Pearson book: Foundations of Finance, The Logic and Practice of Financial Management by Keown, Martin, and Petty.

You are considering investing in an asset. You are given the following information, which describes the return and probability distribution for three different investment alternatives.

Rate of Return State of the Economy Probability Asset A Asset B Asset C Boom 30% 18% 12% 20% Normal growth 50% 12% 10% 11% Recession 20% 5% 8% 6%