Use the Table for the Question(s)below

question 14

Multiple Choice

Use the table for the question(s) below.
Consider the following probability distribution of returns for Alpha Corporation:
-Suppose an investment is equally likely to have a 35% return or a -20% return.The variance on the return for this investment is closest to:

• A).151.
• B).0378.
• C)0.
• D).075.

---

Definitions:

Risk Neutral

A risk neutral person or entity is indifferent between choices with different levels of risk, focusing solely on the expected outcome without concern for the variability of returns.

Risk Averse

Personality or preference indicating a tendency to avoid taking risks, preferring certainty or less risky options.

Income

The money received, especially on a regular basis, for work, through investments, or from benefits.

Utility Function

A mathematical representation that ranks an individual's preferences for various combinations of goods and services based on the level of satisfaction (utility) they provide.