Maston Corporation Has Forecasted the Value of the Russian Ruble

question 7

Multiple Choice

Maston Corporation has forecasted the value of the Russian ruble as follows for the next year:
$\begin{array}{cccc}\underline {\text { Percentage Change} }&\underline{ \text { Probability of Occurrence }} \\ \text {-5\% } &20\%\\ \text { -3\% } &50\%\\ \text { 1\% } &30\%\\\end{array}$

If the Russian interest rate is 30%, the expected cost of financing a one-year loan in rubles is:

• A)27.14%.
• B)32.86%.
• C)26.10%.
• D)none of the above

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Definitions:

Conditioning

A method of altering behavior in which an individual learns to connect a previously neutral stimulus with a behavior they want to adopt.

Association

The process by which the mind links ideas, objects, or sensations together in the memory or imagination.

Sappers

Military engineers who perform a variety of tasks including laying or clearing minefields, demolishing buildings, and building bridges and roads, often under combat conditions.

Zimmerman Telegram

A secret communication sent by the German Empire to Mexico in 1917, proposing a military alliance against the United States, contributing to the U.S. decision to enter World War I.