Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You loan a friend $5,000. There is a 15% chance your friend will pay you a 3% return, a 40% chance he will pay

image

You loan a friend $5,000. There is a 15% chance your friend will pay you a 3% return, a 40% chance he will pay you a 2% return and a 45% chance he will pay you only a 1% return. What is your expected return after one year? O a.) 2.20% b.) 2.05% O c.) 1.80% d.) 1.70%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

To find the expected return after one year we can calculate the weigh... blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Income Tax Fundamentals 2013

Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill

31st Edition

1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516

More Books

Students also viewed these Finance questions