Instruction 5-5
There Are Two Houses with Almost Identical Characteristics

question 164

Short Answer

Instruction 5-5
There are two houses with almost identical characteristics available for investment in two different neighbourhoods with drastically different demographic composition.The anticipated gain in value when the houses are sold in 10 years has the following probability distribution:
Returns
$$\begin{array} { | c | c | c | } \hline \text { Probability } & \text { Neighbourhood A } & \text { Neighbourhood B } \\\hline .25 & - \$ 22,500 & \$ 30,500 \\\hline .40 & \$ 10,000 & \$ 25,000 \\\hline .35 & \$ 40,500 & \$ 10,500 \\\hline\end{array}$$
-Referring to Instruction 5-5,what is the expected value gain for the house in neighbourhood A?

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Definitions:

Relative Proportions

Ratios or relationships in size, quantity, or degree between elements or components.

Essential Fat

The minimum amount of body fat necessary for the maintenance of health and bodily functions, differing by gender.

Physiological Functioning

The operations and processes of living organisms and their parts, including growth, reproduction, and maintenance of health.

Hormone Production

The process of creating and releasing chemicals by the endocrine glands into the bloodstream to regulate various bodily functions.