(Last Word) Suppose Balin Has $100 to Invest in an Opportunity

question 172

Multiple Choice

(Last Word) Suppose Balin has $100 to invest in an opportunity that returns, for every $100 invested, $120 if it goes well but only $80 if it goes poorly. If leverage allows Balin to borrow $90 for every $10 he invests, what are
His rates of profit and loss, respectively, if he borrows the full amount to invest in the opportunity?

• A) 20 percent profit; 20 percent loss
• B) 33.3 percent profit; 50 percent loss
• C) 200 percent profit; 100 percent loss
• D) 1,100 percent profit; 100 percent loss

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Definitions:

ACME Corporation

A fictional company often used as a generic example in discussions or illustrations of business concepts.

Resource Demand

The desire and ability of firms to acquire economic resources or inputs like labor, technology, and raw materials, influenced by the price of these resources and the level of economic output.

Population Growth

The increase in the number of individuals in a population, usually expressed as a percentage of the total population per year.

Consumption Per Person

A measure of the average amount of goods and services consumed by each person within a specific population.