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deveronyarbrough
09.03.2020 •
Business
Consider the following two investment alternatives. First, a risky portfolio that pays 20% rate of return with a probability of 60% or 5% with a probability of 40%. Second, a treasury bill that pays 6%. If you invest $50,000 in the risky portfolio, your expected profit would be .
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Ответ:
Expected profit will be $7,000
Explanation:
Expected value are calculated by multiplying the probabilities to the value of possible outcome. If we invest in risky portfolio then return rate wiil be as follow
Expected return rate on Risky portfolio = ( 20% x 60% ) + ( 5% x 40% )
Expected return rate on Risky portfolio = 12% + 2% = 14%
Amount invested = $50,000
Return on investment = $50,000 x 14% = $7,000
Ответ: