SOLUTION: IF THERE IS 20% CHANCE WE WILL GET A 16% RETURN, A 30% CHANCE OF GETTING A 14% RETURN, A 40% CHANCE OF GETTING A 12% RETURN, AND A 10% CHANCE OF GETTING AN 8% RETURN, WHAT IS THE E

If you need immediate math help from PAID TUTORS right now, click here. (paid link)
Click here to see ALL problems on Money Word Problems

Question 69777: IF THERE IS 20% CHANCE WE WILL GET A 16% RETURN, A 30% CHANCE OF GETTING A 14% RETURN, A 40% CHANCE OF GETTING A 12% RETURN, AND A 10% CHANCE OF GETTING AN 8% RETURN, WHAT IS THE EXPECTED RATE OF RETURN?
I GOT 12% BUT I AM SO DOUBTFUL THATS CORRECT, PLEASE ADVISE AND EXPLAIN HOW TO ARRIVE AT THE CORRECT SOLUTION WITH THESE PROBLEMS.
THANK YOU FOR YOUR MUCH NEEDED HELP.
ANNETTE

Answer by stanbon(48554) (Show Source):
You can put this solution on YOUR website!
IF THERE IS 20% CHANCE WE WILL GET A 16% RETURN, A 30% CHANCE OF GETTING A 14% RETURN, A 40% CHANCE OF GETTING A 12% RETURN, AND A 10% CHANCE OF GETTING AN 8% RETURN, WHAT IS THE EXPECTED RATE OF RETURN?
------------------
Expected Value:
0.20(0.16) + 0.30(0.14) + 0.40(0.12)= 0.122
or 12.2%
Cheers,
Stan H.