Asked by Justin Mccoy on Sep 24, 2024
Verified
Smart Sam can make a $200 investment that yields $1000 50% of the time and $0 50% of the time.What is his expected return on the investment?
A) $200
B) $300
C) $400
D) $500
Expected Return
The projected profit or loss from an investment over a given period.
Investment
The action of allocating resources, usually money, with the expectation of generating an income or profit.
Yields
The income return on an investment, such as the interest or dividends received from holding a particular security.
- Understand the financial consequences associated with high-risk investments and the significance of interest rates.
Verified Answer
CB
carol bellz5 days ago
Final Answer :
B
Explanation :
The expected return is calculated as (0.5 * $1000) + (0.5 * $0) - $200 = $500 - $200 = $300.
Learning Objectives
- Understand the financial consequences associated with high-risk investments and the significance of interest rates.
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