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:

At Most One

Indicates a restriction or condition where the maximum number of occurrences or instances is one.

Standard Deviation

A statistical measure of the dispersion or variability of a set of numbers, indicating the average distance from the mean.

Montana Highways

Refers to the network of state and interstate highways that crisscross the state of Montana, serving as important transportation routes.

Speed Limit

A legally determined maximum speed at which vehicles may travel on a particular road or area.