You Have a Decision to Invest $10,000 in Any of Four

question 28

Multiple Choice

You have a decision to invest $10,000 in any of four different companies. You estimate the probabilities that the economy will be favourable or unfavourable and you estimate the percent returns over the next year. What is the expected value for Company 4?

• A) 5.20%
• B) 5.4%
• C) 5.6%
• D) 9.4%

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Definitions:

Unearned Revenue

Revenue received by a company for goods or services that are yet to be delivered or performed.

Cash

The most liquid form of assets, representing currency or assets that can be immediately turned into currency.

Prepaid Expense

An expense that is paid for in advance and recorded as an asset until it is actually incurred.

Double-Entry Bookkeeping

An accounting system in which the recording of each transaction affects two or more accounts and the total of the debits is equal to the total of the credits.