If an Investment Is 80 Percent Likely to Gain 40

question 350

Multiple Choice

If an investment is 80 percent likely to gain 40 percent but also 20 percent likely to lose 10 percent, then its average expected rate of return is

• A) 34 percent.
• B) 32 percent.
• C) 30 percent.
• D) 12 percent.

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Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit account columns to check the accuracy of the entries.

Journal Entry

A record in accounting that represents a transaction, documenting the debit and credits affected by it.

Debit

A bookkeeping record that elevates the value of an asset or expense account, or reduces the value of a liability or equity account.

Credit

A bookkeeping entry that increases the balance of a liability, equity account, or revenue, or decreases the balance of an asset or expense account.