AIM 1: Define, calculate and interpret the expected value.
1、An investor is considering purchasing ACQ. There is a 30% probability that ACQ will be acquired in the next two months. If ACQ is acquired, there is a 40% probability of earning a 30% return on the investment and a 60% probability of earning 25%. If ACQ is not acquired, the expected return is 12%. What is the expected return on this investment?
A) 18.3%.
B) 16.5%.
C) 12.3%.
D) 17.4%. |