If an Investment Is 70 Percent Likely to Return 10

question 285

Multiple Choice

If an investment is 70 percent likely to return 10 percent per year and 30 percent likely to return 15 percent a year, then its average expected rate of return is

• A) 10.5 percent.
• B) 11.0 percent.
• C) 11.5 percent.
• D) 12.5 percent.

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Definitions:

Consignment

Sales of goods through an agent who has possession but not ownership.

Title

The legal right to own, use, or dispose of something, such as property or intellectual property.

Consigned Party

The entity or person holding goods on behalf of another in a consignment agreement, where the goods are sold on the owner's behalf.

Weighted-Average Method

An inventory costing method that calculates the cost of ending inventory and cost of goods sold using the average cost of all similar items in inventory.