Use the Following to Answer Questions

question 129

Multiple Choice

Use the following to answer questions:
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.
-(Scenario: Buying Shares) Look at the scenario Buying Shares. The probability that Geordie will sustain a loss is _____ if he invests $1,000 in either Apple or Microsoft and is _____ if he invests $500 apiece in Apple and in Microsoft.

• A) 40%; 40%
• B) 40%; 16%
• C) 80%; 20%
• D) 40%; 80%

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Definitions:

Bad Check

A check that cannot be processed because the account on which it is drawn does not have sufficient funds.

Seller Transfers

The act of a seller handing over the rights, responsibilities, and ownership of products or property to the buyer.

Merchant

An individual or company engaged in the business of selling goods or services in the marketplace.

Ordinary Course of Business

Regular and routine operations of a company, including transactions and activities that are normal for the business.