Multiple Choice
Let's suppose you recently bought a share of BHP Billiton for $110.00. You plan to sell the share next year. You estimate that there is a 25% chance that the shares will sell for $115 at the end of 1 year, 50% chance it will sell for $120 and 25% chance it will sell for $112. Moreover, you estimate that the company will pay a $3 dividend per share under any circumstances. What is your total expected return?
A) 8.27%.
B) 8.86%.
C) 22.25%.
D) 23.64%.
Correct Answer:
Verified
Correct Answer:
Verified
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