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SCENARIO 5-11
There are two houses with almost identical characteristics available for investment in two different
neighborhoods with drastically different demographic composition. The anticipated gain in value
when the houses are sold in 10 years has the following probability distribution:
-Referring to Scenario 5-11, if your investment preference is to minimize the amount of risk that
you have to take and do not care at all about the expected return, will you choose a portfolio that
will consist of 10%, 30%, 50%, 70%, or 90% of your money on the house in neighborhood A and
the remaining on the house in neighborhood B?
Anxious
Feeling of worry, nervousness, or unease about something with an uncertain outcome.
Narcissist
An individual exhibiting excessive self-love or self-centeredness, often associated with a lack of empathy and a need for admiration.
Grandiose View
An inflated self-concept, often characterized by overestimations of one’s importance, abilities, or achievements.
Self-Serving Bias
The common tendency to attribute positive outcomes to one's own character but attribute negative outcomes to external factors.
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