Toyota stock has the following probability distribution of expected prices one year from now: If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Toyota
A)17.72%
B)18.89%
C)17.91%
D)18.18%

Question

Toyota stock has the following probability distribution of expected prices one year from now:  If you buy Toyota today for $55 and it will pay a dividend during the year of $4 per share, what is your expected holding-period return on Toyota
A)17.72% 
B)18.89% 
C)17.91% 
D)18.18%

Quizplus · Accepted Answer

E(P1) = .25 (54/55 - 1) + .40 (64/55 - 1) + .35 (74/55 - 1) = 18.18%.

Toyota Stock Has the Following Probability Distribution of Expected Prices