Suppose the return on a one-year bond from Ford Motor is given by the following table: Probability Rate of Return 0.1 1% 0.7 15% 0.2 3% a.

3%

a.     Does this probability distribution satisfy the characteristics of a probability distribution?

b.     What is the expected return on this bond? Show your work!!

c.     How does the expected utility differ from an expected return?  Explain