An Experiment Has Four Possible Outcomes: A, B, C, and D

question 11

Multiple Choice

An experiment has four possible outcomes: A, B, C, and D. Which of the following is a legitimate assignment of probabilities for these four events?

• A) 0.3, 0.3, 0.3, 0.3
• B) 0.2, 0.4, 0.1, 0.3
• C) 0.6, 0.2, 0.3, -0.1
• D) 0.2, 0.2, 0.4, 0.4

---

Definitions:

Nominal Rate of Interest

The stated interest rate on a loan or financial asset, without adjustment for inflation or other factors.

Real Rate of Interest

The inflation-adjusted interest rate, which shows the actual cost of borrowing and the genuine return for lenders or investors.

Inflation Rate

The rate at which prices for all goods and services climb, resulting in a decrease in the ability to purchase.

Holding-Period Return

The return on an investment over the period it is held.