Suppose an Asset Is Worth $100,000 Now and in One

question 27

Multiple Choice

Suppose an asset is worth $100,000 now and in one year it will either be worth $115,000 or $95,000 with equal chance) . The expected return and risk as defined in Chapter 9) are:

• A) 15% return, 20% risk
• B) 15% return, 17.4% risk
• C) 0% return, 5% risk
• D) 0% return, 10% risk
• E) 5% return, 10% risk

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Definitions:

Word Association

A psychological process where words elicit related thoughts, feelings, or other words based on an individual's experiences and knowledge.

Alligator-apple

A tropical fruit from the Annona glabra tree, known for its apple-like appearance and flavor, often found in wetland areas.

Trace Consolidation

The process by which memories become stable in the brain, transitioning from a vulnerable state after initial encoding to a more lasting state.

Semantic Memory

Memory for facts (including word meanings); these memories are not tied to any specific time or place.