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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 using your study notes and I know of at least 5 other friends of mine who used it and passed the exam last Dec. Keep up your great work!
Barnes
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.