V. An investor noted that if you bought 1000 stock shares of Company XYZ a year...

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V. An investor noted that if you bought 1000 stock shares of Company XYZ a year ago, you would have profited $1,000 today. If you bought 1000 shares two years ago, you would have profited $3000 today. And if you bought 1000 shares three years ago, you would have profited $5000 today. The investor then decided to buy 1000 shares of Company XYZ today expecting a profit of $7000 after four years. (a) What type of reasoning was used by the investor in making his decision? Explain your (2 points) answer. (b) Following the reasoning of the investor, what is his expected profit after 10 years? Show your computation. (3 points) (c) Is it guaranteed that the investor will actually receive his expected profit in the future? Explain your answer. (2 points) V. An investor noted that if you bought 1000 stock shares of Company XYZ a year ago, you would have profited $1,000 today. If you bought 1000 shares two years ago, you would have profited $3000 today. And if you bought 1000 shares three years ago, you would have profited $5000 today. The investor then decided to buy 1000 shares of Company XYZ today expecting a profit of $7000 after four years. (a) What type of reasoning was used by the investor in making his decision? Explain your (2 points) answer. (b) Following the reasoning of the investor, what is his expected profit after 10 years? Show your computation. (3 points) (c) Is it guaranteed that the investor will actually receive his expected profit in the future? Explain your answer. (2 points)

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Investor Reasoning and Expected Profit a Type of Reasoning The investor used linear extrapolation in ... View the full answer