Which of the Following Statements Is Correct for an Investor

question 12

Multiple Choice

Which of the following statements is correct for an investor starting with $1,000 in common stocks over a 20-year investment horizon in which stocks averaged 11 percent in nominal terms and 4 percent in real terms? The portfolio value is now approximately:

• A)$1,800 in real terms
• B)$3,679 in real terms
• C)$3,870 in nominal terms
• D)$8,062 in nominal terms FV = $1,000(1.11)²⁰
• = 1,000 (8.06231)
• = 8,062.31
• FV = $1,000(1.04)²⁰
• = 1,000(2.19112)

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Definitions:

Kitty Genovese Case

A murder case that became famous for purportedly demonstrating bystander apathy, leading to research on the "bystander effect."

Social Loafing

The phenomenon where individuals exert less effort to achieve a goal when they work in a group than when they work alone.

Group Polarization

The tendency for group members' opinions to become more extreme (either stronger or weaker) after group discussions.

Bystander Effect

A social psychological phenomenon in which individuals are less likely to offer help to a victim when other people are present.