Scenario 5.4: Suppose an Individual Is Considering an Investment in Which There

question 32

Multiple Choice

Scenario 5.4:
Suppose an individual is considering an investment in which there are exactly three possible outcomes, whose probabilities and payoffs are given below:
The expected value of the investment is $25. Although all the information is correct, information is missing.
-Refer to Scenario 5.4. What is the variance of the investment?

• A) -75
• B) 275
• C) 3,150
• D) 4,637.50
• E) 8,125

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Definitions:

Bystander Effect

A social psychological phenomenon where individuals are less likely to help a victim when other people are present, often due to diffused responsibility.

Nature of Groups

The characteristics, dynamics, and processes that define how groups are formed, function, and dissolve.

Group Cohesiveness

The extent to which members of a group are bound together, typically leading to increased group functioning and harmony.

Groupthink

A psychological phenomenon that occurs within a group of people when the desire for harmony or conformity results in an irrational or dysfunctional decision-making outcome.