TABLE 17-4
A stock portfolio has the following returns under the market conditions listed below.
$$\begin{array} { c c c }
\text { Market Condition } & \text { Probability } & \text { Return } \
\hline \text { Bull } & 0.4 & \$ 200 \
\text { Stable } & 0.3 & \$ 100 \
\text { Bear } & 0.3 & - \$ 100
\end{array}$$
-Referring to Table 17-4, what is the EMV?
A) $80
B) $90
C) $130
D) $180

Question

TABLE 17-4 
A stock portfolio has the following returns under the market conditions listed below.
 $$\begin{array} { c c c } 
\text { Market Condition } & \text { Probability } & \text { Return } \
\hline \text { Bull } & 0.4 & \$ 200 \
\text { Stable } & 0.3 & \$ 100 \
\text { Bear } & 0.3 & - \$ 100
\end{array}$$
-Referring to Table 17-4, what is the EMV?
A) $80
B) $90
C) $130
D) $180

Quizplus · Accepted Answer

The Expected Monetary Value (EMV) is calculated by multiplying each return by its probability and summing the results: (0.4 * 200) + (0.3 * 100) + (0.3 * -100) = 80.

TABLE 17-4 a Stock Portfolio Has the Following Returns

TABLE 17-4
a Stock Portfolio Has the Following Returns