Your Investment Has a 20% Chance of Earning a 30

question 67

Multiple Choice

Your investment has a 20% chance of earning a 30% rate of return,a 50% chance of earning a 10% rate of return and a 30% chance of losing 6%.What is your expected return on this investment?

• A) 12.8%
• B) 11.0%
• C) 8.9%
• D) 9.2%

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Definitions:

Budget Line

A graphical representation of all possible combinations of two goods that can be purchased with a given budget at set prices.

Absolute Value

The distance of a number from zero on the number line, without considering direction.

Money Income

Refers to the total amount of monetary income received by an individual or household over a certain period of time, including wages, salaries, bonuses, and any other income in cash forms.

Factors of Production

The resources used in the production of goods and services, typically categorized into land, labor, capital, and entrepreneurship.