A particular stock is currently trading at $1. An expert market analyst determines that in one year, the price of the stock will

Question

A particular stock is currently trading at $1. An expert market analyst determines that in one year, the price of the stock will be: $2 with a probability of 0.5; $3 with a probability of 0.1; and nothing ($0) with a probability of 0.4. 
f the random variable X represents the gain or loss in the stock price in one year, what is the expected value of X?

Kunduz · Accepted Answer

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