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

---

Definitions:

Astrology

A belief system that posits the positions and movements of celestial bodies can directly influence human affairs and natural events.

Scriptures Literally

Interpreting religious texts in a way that takes the words in their most basic and straightforward meaning without metaphor or allegory.

Fundamentalists

Interpret their scriptures literally, seek to establish a direct, personal relationship with the higher being(s) they worship, and are relatively intolerant of nonfundamentalists.

Personal Relationship

A close, intimate, or familial connection between two or more individuals characterized by affection, trust, and mutual respect.