Suppose Interest of 5% for Two Years Can Be Earned

question 96

Multiple Choice

Suppose interest of 5% for two years can be earned on $1,000 saved today with no risk.What is the least amount a person would need to have a 50% chance of winning to be willing to face a 50% chance of losing $1,000 today and be considered risk averse?

• A)$907.03 to be paid in two years
• B)$1,000.01 to be paid in two years
• C)$1,100.01 to be paid in two years
• D)$1,102.51 to be paid in two years

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Definitions:

Decreased Appetite

An reduction in the desire to eat, which can stem from psychological, physiological, or medical conditions.

2-year-old

Describes an individual who is two years of age, a period in early childhood marked by rapid development in motor skills, language, and social interaction.

Calories

A unit of energy used to quantify the amount of energy obtained from food and drinks, as well as the energy expended through physical activity.

Salty Foods

Foods high in salt content, which can enhance flavor but may also pose health risks if consumed in excess, such as increased blood pressure.