Determine the expected rate of return on the stock

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Reference no: EM13298943

Phoenix Company common stock is currently selling for $20 per share. Security analysts have assigned the following probability distribution to the price of (and rate of return on) Phoenix stock one year from now:

Price Rate of Return Probability
$16 -20% .25
$20 0 .30
$24 +20% .25
$28 +40% .20

Assuming that Phoenix is not expected to pay any dividends during the coming years, determine the expected rate of return on the stock.

Reference no: EM13298943

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