SOLUTION: an investor bought 1,500 shares of a stock for $6 a share. He estimates the probability that the stock will rise to a value of $25 a share is 24%, and the probability it will fall

SOLUTION: an investor bought 1,500 shares of a stock for $6 a share. He estimates the probability that the stock will rise to a value of $25 a share is 24%, and the probability it will fall

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Question 1036940: an investor bought 1,500 shares of a stock for $6 a share. He estimates the probability that the stock will rise to a value of $25 a share is 24%, and the probability it will fall to $2 a share is 76%. What is the expected value of the investor's profit from buying the stock?
Answer by jorel555(1290) (Show Source): You can put this solution on YOUR website!
The expected value of profit is 24%(25-6)-76%(6-2) which is:
.24(19)-.76(4)=4.56-3.04=$1.52 expected profit!!!!!!!!!
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