Samantha Has Holdings of 250 Troy Ounces of Platinum, Currently

question 109

Multiple Choice

Samantha has holdings of 250 troy ounces of platinum, currently valued at $820 dollars per ounce. She estimates that the price of platinum will rise to $869.20 per ounce in the next year. If the interest rate is 12%, should she sell the platinum today?

• A) Yes, as the difference between the present value of selling now and selling in one year is $12,300 dollars today.
• B) Yes, as the difference between the present value of selling now and selling in one year is $10,982 dollars today.
• C) Yes, as the difference between the present value of selling now and selling in one year is $9840 dollars today.
• D) No, as the difference between the present value of selling now and selling in one year is -$8786 dollars today.

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Definitions:

Expected Return

The anticipated average return of an investment over a given period, factoring in all possible outcomes.

Portfolio Return

The overall gain or loss generated by an investment portfolio over a particular period of time, taking into account both capital gains and income received.

Expected Return

The anticipated average return from an investment based on its probable profits.

Recession

A period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.