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

question 196

Short Answer

SCENARIO 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 Scenario 5-7,if you can invest 30% of your money on the house in neighborhood A and the remaining on the house in neighborhood B,what is the portfolio risk of your investment?

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Definitions:

Marginal Utility

is the additional satisfaction or benefit a consumer derives from consuming one more unit of a good or service.

Total Utility

The total satisfaction or benefit a person derives from consuming a certain quantity of goods or services.

Consumer Derives

The satisfaction or utility that a consumer obtains from purchasing and using goods or services.

Satisfaction

The fulfilment of one's needs or desires through the consumption of goods or services, often used as a measure of consumer contentment with a product.