​You Can Either Invest in Project a or B

question 9

Multiple Choice

​You can either invest in project A or B.Project A could have a value of $150 with a probability of 0.1 or a value of $75 with probability 0.9.Project B could have a value of $110 with probability 0.2 or a value of $65 with a probability of 0.8.Which project should you invest in?

• A)​Project A
• B)Project B
• C)Neither of the projects
• D)​You cannot tell from the information presented

---

Definitions:

Debt Instrument

A debt instrument is a document or contract representing a loan made by an investor to a borrower, specifying terms of repayment and interest.

Equity Investment

Funds invested in a company by purchasing shares of its stock, representing ownership interest.

Derivative

A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets—such as stocks, bonds, commodities, currencies, interest rates, or market indexes.

Equity Contracts

Agreements that represent ownership interest in a corporation, potentially including options, warrants, and other financial instruments.