​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:

Standard Deviation

A statistical measure that represents the dispersion or variability of a data set or investment returns around the mean.

Covariance

A measure of the degree to which two variables move in relation to each other. It can indicate if the movements are positively or negatively correlated.

Portfolio

A collection of financial investments like stocks, bonds, commodities, and cash equivalents owned by an individual or institutional investor.

Expropriation

The act of a government taking privately owned property, often without fair compensation, for the public good.