SOLUTION: An investor bought 1,200 shares of a stock for $5 a share. He estimates the probability that the stock will rise to a value of $25 a share is 26%, and the probability it will fall

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Question 1082449: An investor bought 1,200 shares of a stock for $5 a share. He estimates the probability that the stock will rise to a value of $25 a share is 26%, and the probability it will fall to $2 a share is 74%. What is the expected value of the investor’s profit from buying the stock?
$15,576
$3,576
$9,576
$6,000
Answer by jorel1380(3719) About Me  (Show Source):
You can put this solution on YOUR website!
Expected profit:25-5 x .26=5.2
Expected loss:2-5 x .74=-2.22
Overall gain/loss=1200(5.2-2.22)= +$3576. ☺☺☺☺