Question
On January 1, Windsor Inc. completed its analysis of the prospects for the Geriatric Toy Store and concluded that there was a 25-percent chance the
On January 1, Windsor Inc. completed its analysis of the prospects for the Geriatric Toy Store and concluded that there was a 25-percent chance the stock price would be $190 in one year and an 75-percent chance the stock price would be $240. Six months later, Windsor Inc. revised its estimated probabilities to a 40-percent chance of a stock price of $190 and a 60 percent chance of $240. If the market agrees with Windsor 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? Decrease/Increase? of How much?
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