​Smart Sam Can Make a $200 Investment That Yields $1000

question 56

Multiple Choice

​Smart Sam can make a $200 investment that yields $1000 50% of the time and $0 50% of the time.What is his expected return on the investment?

• A)​$200
• B)$300
• C)$400
• D)​$500

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Definitions:

Balanced Funds

Mutual funds that invest in a mix of asset classes, typically stocks and bonds, aiming for a balance between risk and return.

Equities

Shares of stock representing ownership interests in companies, offering potential for capital gains and dividends.

Fixed-income Securities

Financial instruments that pay a fixed amount of income, usually in the form of interest or dividends, like bonds or preferred stocks.

Pass-through Status

A business structure that allows profits to be passed directly to owners or shareholders without being subject to corporate taxes.