What is the expected return on security B?
A) 8%
B) 10%
C) 11%
D) 12.8%
E) 13.8%

Name: What is the expected return on security B? A) 8% B) 10% C) 11% D) 12.8% E) 13.8%
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Question

Quizplus · Accepted Answer

The expected return on security B is calculated by multiplying the probability of each outcome by its corresponding return and then adding them up. 0.3(10%) + 0.5(12%) + 0.2(15%) = 1.2% + 6% + 3% = 10.2%. Therefore, the best choice is D with an expected return of 12.8%, which is higher than the return of security B.

What Is the Expected Return on Security B