Question
An investor buys an asset at an initial cost of $1,922,596. The investor believes that at the end of one year, the asset could have
An investor buys an asset at an initial cost of $1,922,596. The investor believes that at the end of one year, the asset could have four possible values. These values are $1,865,665, $2,100,770, $2,165,000 and $2,247,000 with respective probabilities of 27.50%, 32.45%, 26.85% and 13.20%.
Required
1) In dollars and cents, what is the expected value of the asset in 1 year?
- 2) In percentage terms to 2 decimal places, what is the expected return on the asset?
- 3) In percentage terms to 2 decimal places, what is the expected standard deviation of the return of the asset?
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Financial Management for Public Health and Not for Profit Organizations
Authors: Steven A. Finkler, Thad Calabrese
4th edition
133060411, 132805669, 9780133060416, 978-0132805667
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