Investment A pays $1,200 half of the time and $800 half of the time. Investment B pays $1,400 half of the time and $600 half of the time. Which of the following statements is correct?
A. Investment A and B have the same expected value, but A has greater risk.
B. Investment A has a greater expected value than B, but B has less risk.
C. Investment B has a higher expected value than A, but also greater risk.
D. Investment A and B have the same expected value, but A has lower risk than B.
Answer: D
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If the endowment allocation in an Edgeworth Box is efficient, then this allocation is also the competitive equilibrium allocation.
Answer the following statement true (T) or false (F)
A firm that is seeking to minimize costs to produce a certain output:
a. has a fixed budget b. has a large budget c. wants to use the smallest possible budget possible d. wants to use the same budget as that used last year
(Last Word) A major objection to creating a legal market for human organs is that such a market would:
A. create a substantial surplus of unused organs. B. increase the present shortage of organs. C. commercialize human body parts and thus diminish the special nature of human life. D. encourage healthier lifestyles to maintain saleable organs.
When the policy rate decreases,
A) IS curve does not change. B) IS curve shifts to the right. C) IS curve shifts to the left. D) LM curve shifts upward. E) LM curve shifts downward.