Joe carefully studies any potential investment. He is currently examining the possibility of investing in HBC and has broken the potential results of the investment into four possible outcomes with accompanying probabilities. The outcomes are annual returns (in dollars) on a single share of HBC that currently sells for $40.

Return on investment: -$15 $0 $15 $20

Probability: 0.25 0.35 0.15 ?

(a) What is the expected return of investing in a single share of HBC (in dollars)?

(b) If Joe purchases stock whenever the expected rate of return exceeds 10%, will he purchase the stock? Why or why not?