Assume that there are three possible states of the economy: poor, moderate and booming. A firm...

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Finance

Assume that there are three possible states of the economy:poor, moderate and booming. A firm expects to have $468,000 insales in a poor economy, $694,000 in a moderate economy, and$915,000 in a booming economy. Suppose the profit margin, for thisfirm, in a poor economy is 5.6 percent, 11.5 in a moderate economyand 16.5 percent in booming economy. If the chance of a boomingeconomy is 25% and the chance of a poor economy is 15%, what is theexpected amount of profits for the firm?
A. more than $77,500 but less than $83,400
B. more than $83,400 but less than $89,300
C. more than $89,300 but less than $95,200
D. more than $95,200 but less than $101,100
E. more than $101,100
You own $2,400 of Alpha Bits stock that has a beta of 1.25. Youalso own $3,200 of Dental Drills (beta = 0.72) and $1,400 of OmegaOils (beta = 2.04). What is the beta of your portfolio?
A. more than 1.90
B. more than 1.55 but less than 1.90
C. more than 1.20 but less than 1.55
D. more than 0.95 but less than 1.20
E. less than 0.95

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Q1 State Sales Profit margin Profit Profit margin x sales Probability Expected Profit Profit x Probability Poor 468000 0056 468000 x 0056 26208 015 015 x 26208 39312 Moderate 694000 0115 694000 See Answer

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Assume that there are three possible states of the economy:poor, moderate and booming. A firm expects to have $468,000 insales in a poor economy, $694,000 in a moderate economy, and$915,000 in a booming economy. Suppose the profit margin, for thisfirm, in a poor economy is 5.6 percent, 11.5 in a moderate economyand 16.5 percent in booming economy. If the chance of a boomingeconomy is 25% and the chance of a poor economy is 15%, what is theexpected amount of profits for the firm?A. more than $77,500 but less than $83,400B. more than $83,400 but less than $89,300C. more than $89,300 but less than $95,200D. more than $95,200 but less than $101,100E. more than $101,100You own $2,400 of Alpha Bits stock that has a beta of 1.25. Youalso own $3,200 of Dental Drills (beta = 0.72) and $1,400 of OmegaOils (beta = 2.04). What is the beta of your portfolio?A. more than 1.90B. more than 1.55 but less than 1.90C. more than 1.20 but less than 1.55D. more than 0.95 but less than 1.20E. less than 0.95