Consider the Following Two Investment Alternatives

question 44

Multiple Choice

Consider the following two investment alternatives. First, a risky portfolio that pays 20% rate of return with a probability of 60% or 5% with a probability of 40%. Second, a Treasury bond that pays 6%. If you invest $50 000 in the risky portfolio, your expected profit would be ________.

• A)$3 000
• B)$7 000
• C)$7 500
• D)$10 000

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Definitions:

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