Quantitative Methods Q178
0. The probability distribution for a company’s dividend yield is as follows:
| Probability | Dividend Yield |
| 0.40 | 6.4% |
| 0.20 | 7.2% |
| 0.15 | 8.1% |
| 0.25 | 6.8% |
The expected value of the dividend yield is closest to:
- Option : B
- Explanation : The expected value of the dividend yield is the sum of the probabilityweighted average of the dividend yields. E(X) = (0.4 * 6.4) + (0.2 * 7.2) + (0.15 * 8.1) + (0.25 * 6.8) = 6.92%.
