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3 years ago

7

Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance

of losing 6%. What is your expected return on this investment

1 answer:

stellarik [79]3 years ago

6 0

Answer:

9.2%

Explanation:

expected return of the investment = potential return x chance of each return happening

Expected return of the investment:

20% chance of occurring x 30% potential return = 0.2 x 30% = 6%
50% chance of occurring x 10% potential return = 0.5 x 10% = 5%

30% chance of occurring x -6% potential return = 0.3 x -6% = -1.8%
total expected return = 9.2%

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Answer:

a. 9.1 percent deflation between the first and second years, and 4 percent deflation between the second and third years.

Explanation:

To calculate the rate of inflation/deflation, we have to divide by the oldest price index.

The second year, the variation of the price index was:

$\Delta PI/PI=\frac{PI_2-PI_1}{PI_1}=\frac{100-110}{110}=\frac{-10}{110}=-0.909=-9.1\%$

This means a 9.1% deflation.

The third year, the variation of the price index was:

$\Delta PI/PI=\frac{PI_3-PI_2}{PI_2}=\frac{96-100}{100}=\frac{-4}{100}=-0.04=-4\%$

This means a 4% deflation.

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3 years ago

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2 years ago

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Explanation:

Functions of money

1. Medium of exchange : money can be used to exchange for goods and services. For example, money serves as a medium of exchange when you pay $20 for your favourite jeans

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3 years ago

Isabel Lopez from Lewiston, Idaho, who is 19 years old, recently received an inheritance of $54,000 from her grandmother's estat

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Answer:

She will have $16,772.59 more in the second investment.

Explanation:

Giving the following information:

Recently she received an inheritance of $54,000 from her grandmother's estate. She plans to use the money for the down payment on a home in ten years when she finishes her education.

We need to use the following formula:

FV= PV*(1+i)^n

First savings account:

FV= 54,000*(1+0.04)^10= $79,933.19

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She will have (96,705.78 - 79,933.19) $16,772.59 more in the second investment.

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2 years ago