You Can Invest in Either Project a or B

question 11

Multiple Choice

You can invest in either project A or B.Project A has value $150 with probability 0.1 and value $75 with probability 0.9.Project B has value $110 with probability 0.2 and value $65 with probability 0.8.

• A)You should invest in project A
• B)You should invest in project B
• C)You should not invest in either
• D)You cannot tell from the information presented

---

Definitions:

Market Return

The total return on investment in the stock market, comprising capital gains and dividends, over a specific period.

Risk-Free Rate

The Risk-Free Rate is the return on an investment with no risk of financial loss, typically associated with government bonds.

Systematic Risk

The exposure to uncertainty within the entire market or a segment of the market that remains despite the diversification of assets.

Portfolio

A collection of investments, such as stocks, bonds, and other financial assets, held by an individual or institution.