Darren Has the Option of Investing in Either Stock a or Stock

question 9

Multiple Choice

Darren has the option of investing in either Stock A or Stock B. There is a 45 percent chance that the return on Stock A will be 25 percent, a 25 percent chance it will be 14 percent, and a 30 percent chance it will be 4 percent. There is a 45 percent chance that the return on Stock B will be 30 percent, a 25 percent chance it will be 9 percent, and a 30 percent chance it will be2 percent. What is the expected rates of return on Stock A and Stock B?

• A)13.65%; 12.85%
• B)14.75%; 13.75%
• C)15.95%; 16.35%
• D)16.80%; 11.45%
• E)14.33%; 13.67%

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Definitions:

MMPI

A psychological assessment that measures personality structure and psychopathology, often used for clinical diagnosis; the initial version that preceded MMPI-2.

Mental Patients

Individuals receiving treatment for psychological disorders or conditions that affect their mood, thinking, and behavior.

Fundamental Attribution Error

A bias towards attributing others' actions to their personal qualities rather than considering the role of external circumstances.

Stroop Effect

A phenomenon demonstrating the cognitive interference where the brain struggles to discern the color of a word when the word itself is naming a different color.