Question

Calculate the expectedgain or loss for Stock JKL.Lose $25 Gain $5 Gain $45Stock ABC 40% 15% 45%Stock JKL 15% 65% 20%Stock MNO80%5%15%

Answer 1

To calculate the expected gain/loss of JKL;

(15% of -25) + (65% of 5) + (20% of 45)

= (0.15 x -25) + (0.65 x 5) + (0.20 x 45)

=- 3.75 +3.25 +9

= 8.5

Since it is positive it is a gain.

Expected gain = $8.5