Question
On January 1, Oriole Inc. completed its analysis of the prospects for the Geriatric Toy Store and concluded that there was a 20-percent chance the
On January 1, Oriole Inc. completed its analysis of the prospects for the Geriatric Toy Store and concluded that there was a 20-percent chance the stock price would be $185 in one year and an 80-percent chance the stock price would be $235. Six months later, Oriole Inc. revised its estimated probabilities to a 35-percent chance of a stock price of $185 and a 65 percent chance of $235. If the market agrees with Oriole Inc.'s revised probabilities, what is the expected change in stock price from January 1 to July 1? Assume the discount rate is zero.(Round answer to 2 decimal places, e.g. 15.25.)
Expected change in stock price
increase OR decrease
of $
.
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