Assume that an investment is forecasted to produce the following returns: a 10% probability of a $1,400 return; a 50% probability of a $6,600 return; and a 40% probability of a $1,500 return.What is the expected amount of return this investment will produce?
A) $4,040
B) $7,640
C) $12140
D) $1,540

Question

Quizplus · Accepted Answer

The expected return is calculated by multiplying each possible return by its probability and summing the results: (0.10 * $1,400) + (0.50 * $6,600) + (0.40 * $1,500) = $4,040.

Assume That an Investment Is Forecasted to Produce the Following