You Have Made an Investment of $250 That Will Yield

question 36

Multiple Choice

You have made an investment of $250 that will yield a profit of $30 in one year.If the interest rate is 11.5% is this a good investment.

• A) Yes, because the internal rate of return is greater than the interest rate
• B) Yes, because the internal rate of return is less than the interest rate
• C) No, because the internal rate of return is greater than the interest rate
• D) No, because the internal rate of return is less than the interest rate

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Definitions:

Expected Value

The long-term average or mean of random variables, taking into account all possible outcomes weighted by their probabilities.

Binomial Experiment

A statistical experiment that has exactly two possible outcomes for each trial and a fixed number of trials, where the probability of success is constant.

Variance

A measure of the spread or dispersion of a set of data points around the mean, indicating how much the data values differ from the average value.

Probability Distribution

A mathematical function that provides the probabilities of occurrence of different possible outcomes for an experiment.