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# Maths Help watch

1. Could somebody please tell me what answer they get for this question ....

You are considering whether to buy 750 shares of a company currently priced at £4 per share. You estimate that the shares will either increase in value by 25% over the next 6 months or decrease by 40% over the same period. You intend holding the shares for 6 months and believe that the probability of a rise in share price is 0.7. Alternatively you can leave the money in the bank and earn £175 in interest over this period.

What is the expected return from the optimal policy to two decimal places?
2. £750.00

Source: I don't know economics
3. (Original post by Docjones1)
£750.00

Source: I don't know economics
really? i did think it was 750.00 but thought that it can't be that straight forward.

Thanks
4. (Original post by antony4321)
really? i did think it was 750.00 but thought that it can't be that straight forward.

Thanks
I literally don't know. I just took the question at face value and that's what the answer struck me as.
5. (Original post by antony4321)
Could somebody please tell me what answer they get for this question ....

You are considering whether to buy 750 shares of a company currently priced at £4 per share. You estimate that the shares will either increase in value by 25% over the next 6 months or decrease by 40% over the same period. You intend holding the shares for 6 months and believe that the probability of a rise in share price is 0.7. Alternatively you can leave the money in the bank and earn £175 in interest over this period.

What is the expected return from the optimal policy to two decimal places?
It's not £750. Suppose you invest in the shares. What is E(X) (where X is the percentage the shares rise by)?

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