You Are a Hotel Manager, and Are Considering Four Projects

question 114

Multiple Choice

You are a hotel manager, and are considering four projects that yield different payoffs, depending upon whether there is an economic boom or recession.The potential payoffs and corresponding payoffs are summarized in the following table.

-The variance in the returns of project C is

• A)15.
• B)225.
• C)40.
• D)1600.

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Definitions:

Compounded Quarterly

A financial calculation where interest is added to the principal four times a year, resulting in an increased amount on which subsequent interest calculations are based.

Lump Sum

A one-time transaction made at a specific moment, rather than several payments spread across a period.

Withdraw

To remove funds from a bank account or investment.

Semi-Annually

Occurring or done every six months or twice a year.