Consider the Following Two Investment Alternatives: First, a Risky Portfolio

question 61

Multiple Choice

Consider the following two investment alternatives: First, a risky portfolio that pays a 20% rate of return with a probability of 60% or a 5% rate of return with a probability of 40%. Second, a Treasury bill that pays 6%. If you invest $50,000 in the risky portfolio, your expected profit after one year would be ________.

• A) $3,000
• B) $7,000
• C) $7,500
• D) $10,000

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Definitions:

Disruptive Selection

An evolutionary process that favors individuals at both extremes of a phenotypic range over those with intermediate phenotypes, leading to a split in the population.

Neutral Traits

Genetic traits that do not provide any selective advantage or disadvantage, thus not subject to natural selection.

Variation Range

The difference between the highest and lowest values in a set of data, measuring the spread or dispersion of the data points.

Exaptation

A trait that becomes used for an entirely new purpose during evolution.