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Business, 09.12.2021 15:20 jimennacastillo15

Company ABC common stock is currently selling for $25 per share. The security analyst have assigned the following probability distribution to the price of (and rate of return by) the ABC stock one year from now. Assuming that ABC is not expected to pay dividends this year, determine the expected rate of return on ABC stock Price Rate of Return Probability $15 -15% 0.25 $20 0% 0.20 $25 +15% 0.30 $30 +25% 0.25 • 15% • 10% • 7% • 3%

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