Consider the Following Two Investment Alternatives

question 43

Multiple Choice

Consider the following two investment alternatives.First,a risky portfolio that pays 20% rate of return with a probability of 60% or 5% with a probability of 40%.Second,a treasury bill that pays 6%.If you invest $50,000 in the risky portfolio,your expected profit would be _________.

• A) $3,000
• B) $7,000
• C) $7,500
• D) $10,000

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Definitions:

Ambiguity

The quality of being open to more than one interpretation; lack of definitiveness or clarity.

Synonymy

The attribute of two or more words having the same or nearly the same meaning.

Infinite Combinations

The concept that elements can be combined in limitless ways to create new ideas or solutions.

Productive

Referring to the ability to generate or create new ideas, objects, or processes that are useful or valued.