Assume a Portfolio Has the Possibility of Returning 7%, 8

question 2

Multiple Choice

Assume a portfolio has the possibility of returning 7%, 8%, 10%, or 12%, with likelihood of 20%, 30%, 25%, and 25%, respectively. The expected value of the portfolio is:

• A)10.0%.
• B)9.0%.
• C)9.3%.
• D)9.25%.
• E)None of the above

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Definitions:

Firm's Output

The total amount of goods or services produced by a firm over a given period of time.

Profit Per Unit

The amount of income that a company earns above its costs for producing one unit of a good or service.

Short Run

A period in which at least one input, such as capital, is fixed, allowing only some factors, like labor, to change in quantity.

Long Run

A period in economics during which all inputs, including capital, are variable, allowing firms to adjust all aspects of production in response to market changes.