Assume that a firm, stableco, faces a 0.4% chance of filing for bankruptcy per month. over the course of 25 years, what is the probability that stableco will file for bankruptcy?

The probability that StableCo will file for bankruptcy over the course of 25 years is 9.53%.

Explanation:

We have the probability of StableCo still operates normally in the business in one year is: 100%-0.4% = 99.60%.

So, the cumulative probability of StableCo still operates normally in the business for 25 years: 99.6% ^25 = 90.47%.

=> The probability that StableCo will file for bankruptcy over the course of 25 years  = 100% - the cumulative probability of StableCo still operates normally in the business for 25 years = 100% - 90.47% = 9.53%.

So, the answer is 9.53%.

ROI (return on investment) is a ratio the measures the amount of return for your investment. The calculation is (net return) / (net investment). In this case net return is the dividends and the cost is the price of the stock. So... (.75)/(16.49)= 4.5% return on investment.