(Scenario: Buying Shares)Use Scenario: Buying Shares

question 179

Multiple Choice

(Scenario: Buying Shares) Use Scenario: Buying Shares.The probability that Geordie will make a gain is _____% if he invests $1,000 in either Apple or Microsoft.The probability that he will make a gain is _____% if he invests $500 apiece in Apple and in Microsoft. Scenario: Buying Shares
Geordie is considering buying shares in two companies,Apple and Microsoft.If he invests $1,000 in Apple,there is a 40% probability that his investment will be worth only $800 and a 60% probability that it will be worth $1,200 at the end of a year.If he invests $500 in Apple,there is a 40% probability that his investment will be worth $400 and a 60% probability that it will be worth $600 at the end of a year.The corresponding numbers for investment in Microsoft are identical.

• A)60;60
• B)60;84
• C)76;24
• D)60;36

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Definitions:

Additional Paid-In Capital

Additional paid-in capital refers to the amount of money investors have paid for shares in a company over and above the stated par value of the shares.

Expired Warrants

Warrants that have reached their expiration date and are no longer valid or exercisable to buy the underlying security at a predetermined price.

Additional Paid-In Capital

The amount of money paid by investors to a company above the par value of the shares during common or preferred stock issuance.

Common Stock Warrants

Common stock warrants are financial instruments that give the holder the right to purchase the issuer's common stock at a specified price before the warrant expires.