Kizspy | Question: 23
(Choose 1 answer)
(See picture)
A. $16,925
B. $20,730
C. $14,975
D. $22,300
E. None of the other choices is correct
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 Neighborhood B
0.25
0.40
0.35
-$22.500
$10,000
$40,500
$30,500
$25,000
$10,500
If you 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?
