Question

Type the correct answer in each box. Use numerals instead of words.

Answer 1

Answer:

The investment is risky because it has only a 1% chance of making a significant impact.

The expected value of the investment is $50,050 return

Explanation:

The expected value of an investment  is relevant returns multiplied by the probability of returns multiplied by the number of times such probability will occur

30% chance   would expected value as 30%*$40,000*1=$12000

50%  chance would have expected value as 50%*50,100*1=$25,050

20% chance would have expected value as 20%*65,000*1=$13000

Expected value in total                                                               $50,050

The riskiness of the investment can be calculated as (expected value-initial investment) /initial investment

initial investment is $50,000

expected value is $50,050

riskiness of investment =($50,050-$50,000)/$50,000

                                        =1%

Answer 2

Answer:

The investment is risky because it has only a

2% chance of making a significant

The expected value of the investment is $ 49,050

return

Explanation:

Investment = $50,000

Expected worth = ( Chance in % x Expected Worth )

30% x $40,000           = $12,000

50% x $50,100            = $25,050

20% x $60,000           = $12,000

Total Expected Worth = $49,050

Expected value is $49,050

Chance to make the same worth is 2% ( (50000-49050 ) / 50,000 )