Answer:
The expected rate of return is $442.5
Step-by-step explanation:
The expected rate of return is given by the following formula;
[tex]E[R] = \displaystyle\sum_{i=1}^n R_i \times P_i[/tex]
Where;
E[R] = The expected return
[tex]R_i[/tex] = The return received in the instance i
[tex]P_i[/tex] = The probability for obtaining the return, [tex]R_i[/tex], in the instance i
n = The number of instances for the calculation
Therefore, we have;
The expected rate of return E[R] = 0.3 × 200 + 0.5×415 + 0.2 × 875 = $442.5
