You are evaluating various investment proposals that have many different outcomes. The one investment opportunity that...
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You are evaluating various investment proposals that have many different outcomes. The one investment opportunity that interests you the most has a possibility of doubling your money. However, when you look into this opportunity, there are other outcomes that are not as rich and rewarding. For your $10,000 investment you have determined the following: 25% chance you will lose your entire investment, (-$10,000) 15% chance you will break even ($0) 25% chance the return will be similar to the overall market of 7% (+$700) 35% you can double your money (+$10,000) Now that you know all the potential outcomes, what would you determine the expected value of this investment opportunity? 10 Points $10,000 $1,175 $6,175 $11,175 You are evaluating various investment proposals that have many different outcomes. The one investment opportunity that interests you the most has a possibility of doubling your money. However, when you look into this opportunity, there are other outcomes that are not as rich and rewarding. For your $10,000 investment you have determined the following: 25% chance you will lose your entire investment, (-$10,000) 15% chance you will break even ($0) 25% chance the return will be similar to the overall market of 7% (+$700) 35% you can double your money (+$10,000) Now that you know all the potential outcomes, what would you determine the expected value of this investment opportunity? 10 Points $10,000 $1,175 $6,175 $11,175
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Related Book For
Modern Advanced Accounting In Canada
ISBN: 9781259066481
7th Edition
Authors: Hilton Murray, Herauf Darrell
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