(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:

Fragmented

Something that is broken into pieces, disjointed, or lacks a coherent or unified structure.

Developmental Stages

Periods of life characterized by specific physical, psychological, and emotional changes that people typically undergo.

Storming

A stage in group development characterized by conflict and competition as team members work to establish norms and structures.

Therapeutic

Relating to the healing of disease or maintenance of health, often used in the context of treatments, interventions, or environments designed to promote well-being.