Answered

IDNLearn.com is your trusted platform for finding reliable answers. Our Q&A platform is designed to provide quick and accurate answers to any questions you may have.

The Triple L investment club is considering purchasing a certain stock. After considerable research, the club members determine that there is a 50% chance of making $12,000, a 20% chance of breaking even, and a 30% chance of losing$6,600. Find the expectation of this purchase.

Sagot :

We would apply the formula for calculating the expectation of the mean or expected value which is expressed as

Ex = ΣxP(x)

In this scenario, from the information given,

12000 is profit at 50%

Breakeven mean = 0 because there is no profit or loss' at 20%

loss = - 6600 at 30 %

Thus,

Expectation = 50/100 * 12000 + 20/100 * 0 + 30/100 * 6600

Expectation = 6000 + 0 + 1980

Expectation = 7980

the expectation of this purchase is $7980

We appreciate every question and answer you provide. Keep engaging and finding the best solutions. This community is the perfect place to learn and grow together. Your questions find answers at IDNLearn.com. Thanks for visiting, and come back for more accurate and reliable solutions.