An Investment Opportunity Has Two Possible Outcomes

question 105

Multiple Choice

An investment opportunity has two possible outcomes. The expected value of the investment opportunity is $250. One outcome yields a $100 payoff and has a probability of 0.25. What is the payoff of the other outcome?

• A) -$400
• B) $0
• C) $150
• D) $300
• E) none of the above

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Definitions:

Law of Torts

A branch of civil law that deals with legal liabilities, obligations, and damages arising from wrongful acts not involving contracts.

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Law enacted by a legislative body, such as a Congress or Parliament, that specifies and mandates behaviors, procedures, and consequences within its jurisdiction.

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A legal defense in defamation cases allowing freedom of expression without liability, provided the statements are made without malice on occasions where the party has a legal, moral, or social duty to make them.

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The use of a product or service in accordance with its intended purpose or guidelines.