Use the Following to Answer the Question(s) Below

question 25

Multiple Choice

Use the following to answer the question(s) below.
As a result of the financial crisis in the fall of 2008, when the government intervened to help the economy, an investor was considering various strategies for her money and the estimated profits would depend on how successful the intervention would be in helping the economy. The estimated annual return for two different investment strategies are shown in the following table.
-If there is a 30% chance that the economy will decline, 50% that there will be no change and 20% chance that it will rebound, the expected value associated with the best investment strategy is

• A) $590.
• B) -$250.
• C) $1290.
• D) $700.
• E) -$450.

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Definitions:

Electronics Division

A specialized department within a larger company focused on the development and production of electronic goods or components.

Variable Selling Expense

Costs that vary directly with the level of sales activity, such as commissions and shipping fees.

Transfer Price

The price at which goods or services are sold between divisions within the same company or between affiliated companies.

Selling Division

A division within a company responsible for the sales and distribution of the company's products or services.