Assume that an investment is forecasted to produce the following returns: a 20% probability of a 12% return; a 50% probability of a 16% return; and a 30% probability of a 19% return.What is the expected percentage return this investment will produce?
A) 33.3%
B) 16.1%
C) 9.3%
D) 15.7%

Question

Quizplus · Accepted Answer

The expected return is calculated by multiplying each possible return by its probability and summing the results: (0.20 * 12%) + (0.50 * 16%) + (0.30 * 19%) = 2.4% + 8% + 5.7% = 16.1%.

Assume That an Investment Is Forecasted to Produce the Following