Consider This Decision Tree,which Represents the Outcomes of Two Alternative

question 2

Multiple Choice

Consider this decision tree,which represents the outcomes of two alternative projects that Ink Inc.,a producer of printers,might pursue.Ink Inc.,needs to borrow $1,000 to pursue either project and is going to sell bonds to finance the venture.
Ink,Inc.,is carrying a large amount of debt because of overexpansion during the dot-com explosion.Under these circumstances,the shareholders would tend to choose:

• A) project A, because it has the highest expected value.
• B) project B, because it has the greatest degree of risk.
• C) project A, because it has the lowest degree of risk.
• D) neither project A nor B, because both are risky.
• E) either project A or B; both have the same degree of risk.

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Definitions:

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The amount of financial resources allocated by a nation for its defense forces and military operations.

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The global framework of legal agreements, institutions, and both formal and informal economic actors that together facilitate international flows of financial capital for purposes of investment and trade financing.