Many Stores Run "Secret Sales": Shoppers Receive Cards That Determine

question 8

Multiple Choice

Many stores run "secret sales": Shoppers receive cards that determine how large a discount they get,but the percentage is revealed by scratching off that black stuff only after the purchase has been totaled at the cash register.The store is required to reveal (in the fine print) the distribution of discounts available.Determine whether the following probability assignment is legitimate. Probability of ... $$\begin{array} { l | l | l | l } 10 \% \text { off } & 20 \% \text { off } & 30 \% \text { off } & 50 \% \text { off } \\\hline 0.20 & 0.20 & 0.40 & 0.20\end{array}$$

• A)Legitimate
• B)Not legitimate

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Definitions:

Betas

Measures the volatility of a stock or portfolio in relation to the overall market, indicating the level of risk associated with the investment.

Diversifiable Risk

A type of investment risk that can be reduced or eliminated in a portfolio through diversification, unlike systemic risk.

Market Risk

The risk of losses in financial markets due to factors such as market volatility, interest rate changes, and economic downturns that affect the entire market.

Required Return

The minimum return that investors expect or demand for an investment to be worth it, considering its risk level.