What Is the Break-Even Probability in the Following Case? a Customer

question 70

Multiple Choice

What is the break-even probability in the following case? A customer wishes to purchase a $2,000 item that has been marked up to 50% over cost.Assume all cash flows are discounted to present value and there is no chance of subsequent sales.

• A) 55.67%
• B) 66.67%
• C) 77.67%
• D) 88.67%

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Definitions:

Expected Returns

The anticipated profit or loss from an investment over a specific period, often used to evaluate the attractiveness of a financial asset.

Portfolio

A collection of financial investments like stocks, bonds, commodities, cash, and cash equivalents, including mutual funds and ETFs.

Covariance

A measure indicating the degree to which two random variables change together.

Variances

Statistical measures of the dispersion of data points in a dataset, indicating how far each data point in the set is from the mean.