Suppose You Are an Investor with a Choice Between Three $\quad$

question 3

Multiple Choice

Suppose you are an investor with a choice between three securities that are identical in every way except in terms of their rates of return and risk.Which investment provides the highest expected return?
Investment A: $\quad$ Total return = 10 percent with probability 50 percent
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ Total return = 20 percent with probability 50 percent

Investment B: $\quad$ Total return = 12 percent with probability 50 percent
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ Total return = 20 percent with probability 50 percent

Investment C: $\quad$ Total return = 5 percent with probability 60 percent
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ Total return = 25 percent with probability 40 percent

Investment D: $\quad$ Total return = 5 percent with probability 60 percent
$\quad$$\quad$$\quad$$\quad$$\quad$$\quad$ Total return = 7 percent with probability 40 percent

• A)Investment A
• B)Investment B
• C)Investment C
• D)Investment D

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Definitions:

Truffles

A type of highly valued fungus that grows underground, often near the roots of certain trees, prized for their distinctive flavor in culinary uses.

Algal Contribution

The impact or role of algae in ecosystems, particularly regarding oxygen production through photosynthesis and as a foundational element of food chains.

Fungal Component

A part or element of a system that is derived from fungi or consists of fungal organisms.

Photosynthetically Derived Food

Nutrients produced by plants through the process of photosynthesis, which are a primary source of energy for herbivores and omnivores.