Ray Crofford Is Evaluating Investment Alternatives for the $100,000 Which

question 56

Multiple Choice

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following table which shows expected profits (in $10,000's) for various market conditions and their probabilities: The EMV of investing in Bonds is ___.

• A)$30,000
• B)$63,000
• C)$78,000
• D)$81,000
• E)$100,000

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Definitions:

Simplifying Assumptions

Simplifying Assumptions are used in economic models to reduce complexity by assuming ideal conditions that may not always reflect real-life scenarios.

Economic Growth

An increase in the economy’s ability to produce goods and services; reflected by an outward shift of the economy’s production possibilities frontier

Unattainable Combinations

refers to product mix scenarios that cannot be achieved with the current resources or technology in economic or production contexts.

Fully And Efficiently

A condition where resources are allocated in a way that maximizes productivity and minimizes waste or inefficiency.