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Basic Question 6 of 6
Consider the following events:
S2: Fed increases interest rates in the first quarter of 2012
S3: Fed leaves interest rates unchanged in the first quarter of 2012
X: Earnings per share for a certain stock
P(S1)=0.3, P(S2)=0.35, P(S3)=0.35, E(X|S1)=3.35, E(X|S2)=3.67, E(X|S3)=3.52
B. $3.52
C. $3.57
S1: Fed decreases interest rates in the first quarter of 2012
S2: Fed increases interest rates in the first quarter of 2012
S3: Fed leaves interest rates unchanged in the first quarter of 2012
X: Earnings per share for a certain stock
We have the following information:
P(S1)=0.3, P(S2)=0.35, P(S3)=0.35, E(X|S1)=3.35, E(X|S2)=3.67, E(X|S3)=3.52
What is the unconditional expected value of the EPS?
A. $3.51
B. $3.52
C. $3.57
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I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.
Andrea Schildbach
Learning Outcome Statements
calculate expected values, variances, and standard deviations and demonstrate their application to investment problems
CFA® 2025 Level I Curriculum, Volume 1, Module 4.