You Have Been Offered the Following Investment Opportunity,if You Pay

question 67

Essay

You have been offered the following investment opportunity,if you pay $2500 today,you will receive $1000 at the end of each of the next three years.Draw a timeline detailing this investment opportunity.

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Definitions:

Adverse Selection

A situation in which asymmetric information results in high-risk individuals being more likely than low-risk individuals to acquire insurance or another financial product, leading to market inefficiency.

Defaulting

Failing to meet the legal obligations of a loan, typically by not making the required payments.

Health Insurance Market

The sector of the economy providing plans and services for individuals to cover healthcare expenses.

Adverse Selection

A situation in markets where buyers and sellers have asymmetric information, leading potentially to a selection of undesirable outcomes, such as in insurance markets where those most likely to need coverage are also most likely to purchase it.