6. You are considering acquiring shares of common stock in the Madison Beer Corporation. Your rate of return expectations are as follows:

MADISON BEER CORP.

Possible Rate of Return: -0.10,0.00,0.10,0.25

Probability: 0.30,0.10,0.30,0.30

Compute the expected return [E(Ri)] on your investment in Madison Beer.

7. A stockbroker calls you and suggests that you invest in the Lauren Computer Company. After analyzing the firms annual report and other material, you believe that the distribution of expected rates of return is as follows:

LAUREN COMPUTER CO.

Possible Rate of Return: -0.60,-0.30,-0.10,0.20,0.40,0.80

Probability: 0.05,0.20,0.10,0.30,0.20,0.15

Compute the expected return [E(Ri)] on Lauren Computer stock.

solution please