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Question
Phoenix Company common stock is currently selling for $20 per share. Security analysts at Smith Blarney have assigned the following probability distribution to the price of (and rate of return on) Phoenix stock one year from now:Price Rate of Return Probability
$16 -20% 0.25
20 0% 0.30
24 +20% 0.25
28 +40% 0.20
Assuming that Phoenix is not expected to pay any dividends during the coming year, determine the expected rate of return on Phoenix Stock.
a. 8%
b. 0%
c. 10%
d. 40%
Answer
This answer is hidden. It contains 57 characters.
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