Use the Following to Answer Questions

question 27

Multiple Choice

Use the following to answer questions :
Scenario: Diversification
Morris is considering investing $10 000 in a sunglass company or a rain poncho company.If it is a rainy year and he invests only in the sunglass company,he will lose $5 000.However,if it is a rainy year and he invests only in the rain poncho company,he will earn $10 000.If it is a sunny year and he invests only in the sunglass company,he will earn $10 000;if he invests only in the rain poncho company,he will lose $5 000 in a sunny year.There is a 50% chance of a sunny year and a 50% chance of a rainy year.
-(Scenario: Diversification) Use Scenario: Diversification.If Morris invests half of his money in the sunglass company and half in the rain poncho company,what is his expected gain or loss?

• A) a loss of $2 500
• B) to break even
• C) a gain of $2 500
• D) a gain of $10 000

---

Definitions:

Inference

The act of drawing logical conclusions from premises known or assumed to be true, often involving deductive or inductive reasoning.

Self-regulation

The ability to understand and manage your behavior and reactions to feelings and things happening around you.

Complex Problem

An issue that is difficult to solve due to its intricate nature or multiple interdependent components.

Intelligent Decisions

Choices made based on understanding, analysis, and sound reasoning, often incorporating advanced cognitive processes.