If the Required Return from an Asset Is 10%,and the Asset

question 9

Multiple Choice

If the required return from an asset is 10%,and the asset has a 60% probability of yielding a 20% return and a 40% probability of earning a 5% return,you should:

• A) Not acquire the asset since the expected return of 32% exceeds the required return.
• B) Purchase the asset since the expected return of 14% exceeds the required return.
• C) Buy the asset because the expected return of 32% exceeds the required return.
• D) Forgo the investment opportunity since the expected return of 14% is too low.
• E) Buy the asset because the expected return of 12.5% exceeds the required return.

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Definitions:

Unit Technology

Refers to the tools, machinery, equipment, and processes used in the production of goods or services, tailored to specific operational units.

Process Production

Refers to the sequence of operations or activities aimed at creating a product or service.

Mass Technology

involves the production and use of technology that is widely accessible and used by large segments of the population.

Large-Scale Production

Refers to the manufacturing of goods in large quantities using efficient methods and often specialized equipment, aiming for economies of scale.