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bigexternal bigexternal
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7 years ago
The Table below presents returns across three states of nature for two assets: Risky and Safe. The expected return on Safe is 8.4%. Which asset has a higher expected return?

State of Nature   Probability   Return to Risky Investment   Return to Safe Investment
Recession   0.2   -5%   14%
Normal   0.6   15%   8%
Boom   0.2   25%   4%

A) Risky
B) Safe
C) Both have the same expected return
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Corporate Finance Online

Corporate Finance Online


Edition: 1st
Authors:
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We're using: Corporate Finance Online (Eakins, McNally)
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BlimpBlimp
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7 years ago
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Pol. Sci. Major
Minoring in Business
Columbia University Sophomore

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bigexternal Author
wrote...
#2
7 years ago
Firstly, thank you for responding
Secondly, ur right!
We're using: Corporate Finance Online (Eakins, McNally)
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