Asked by stanley owuama on Jun 30, 2024
Verified
An investment opportunity has two possible outcomes, and the value of the investment opportunity is $250. One outcome yields a $100 payoff and has a probability of 0.25. What is the probability of the other outcome?
A) 0
B) 0.25
C) 0.5
D) 0.75
E) 1.0
Outcome Yields
The results obtained from a particular action or set of circumstances, typically measured in terms of benefits, profits, or yields.
Investment Opportunity
A specific financial asset, product, or project that an individual, organization, or entity invests in with the expectation of generating a favorable future return.
- Understand the basic concepts of probability and how it applies to investment decisions.
Verified Answer
ZK
Zybrea KnightJul 04, 2024
Final Answer :
D
Explanation :
The total probability of all possible outcomes must equal 1. Therefore, the probability of the other outcome is 1 - 0.25 = 0.75.
Learning Objectives
- Understand the basic concepts of probability and how it applies to investment decisions.