Ten Years Ago, Emma Purchased an Investment for $22,500

question 8

Multiple Choice

Ten years ago, Emma purchased an investment for $22,500. The investment earned 7 percent interest each year. What is the value of the investment today?

• A)$36,667.76
• B)$38,250.26
• C)$40,527.37
• D)$44,260.91
• E)$46,458.63

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Definitions:

Optimal Risky Portfolio

A combination of investments that yields the highest expected return for a specific level of risk.

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of numerical values, often used to assess the risk associated with a particular investment.

Risk-Free Rate

The theoretical return on an investment with no risk of financial loss, typically represented by the yield on government bonds from stable countries.

Perfectly Negatively Correlated

Describes two variables that move in opposite directions; if one increases, the other decreases.