TABLE 5-7 There Are Two Houses with Almost Identical Characteristics Available for Available

question 48

Short Answer

TABLE 5-7
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 Table 5-7, if you can invest half of your money on the house in neighborhood A and the remaining on the house in neighborhood B, what is the portfolio expected return of your investment?

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Definitions:

Small-Company Stocks

Stocks of companies with relatively small market capitalization, often characterized by higher volatility and potentially higher returns.

Canadian Common Stocks

Shares of ownership in Canadian corporations that entitle holders to dividends and voting rights.

Risk

The exposure to uncertainty or the variability of returns associated with a given asset or investment.