Which of the Following Statements Is Correct

question 20

Multiple Choice

Which of the following statements is correct?

• A)Investment A and B have the same expected value, but A has greater risk
• B)Investment B has a higher expected value than A, but also greater risk
• C)Investment A and B have the same expected value, but A has lower risk than B
• D)Investment A has a greater expected value than B, but B has less risk

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Definitions:

Net Capital Loss

This occurs when the total capital losses from investments exceed the total capital gains, which can sometimes be used to offset other types of income for tax purposes.

Ordinary Income

This refers to any income earned through work, interest, dividends, or rental income, subject to standard tax rates.

Dividend Income

Income received from owning shares in a company, paid out from the company's profits.

Charitable Contribution

Financial or material donations given to a charitable organization, often eligible for tax deductions.