5
(Choose 1 answer)
(See picture)
A. $22,300
B. $20,730
C. None of the other choices is correct
D. $16,925
E. $14,975
There are two houses with almost identical characteristics available for investment in two different neighborhoods with drastically different demographic composition. The anticipated gain in value when the houses are sold in 10 years has the following probability distribution:
Returns
Probability Neighborhood A
0.25
Neighborhood B
-$22.500
$30,500
$25.000
0.40
$10.000
$10.500
0.35
$40,500
If you can invest half of your money on the house in neighborhood A and the remaining on the house in neighborhood B. what is the portfolio expected return of your investment?
