Instruction 5.3
There are two houses with almost identical characteristics available for investment in two different neighbourhoods with drastically different demographic composition. The anticipated gain in value when the houses are sold in 10 years has the following probability distribution:
Returns
$$\begin{array} { | c | c | c | }
\hline \text { Probability } & \text { Neighbourhood A } & \text { Neighbourhood B } \
\hline 0.25 & - \$ 22,500 & \$ 30,500 \
\hline 0.40 & \$ 10,000 & \$ 25,000 \
\hline 0.35 & \$ 40,500 & \$ 10,500 \
\hline
\end{array}$$
-Referring to Instruction 5.3,what is the total variance of value gain if you invest in both houses?

Question

Instruction 5.3
There are two houses with almost identical characteristics available for investment in two different neighbourhoods with drastically different demographic composition. The anticipated gain in value when the houses are sold in 10 years has the following probability distribution:
Returns
 $$\begin{array} { | c | c | c | } 
\hline \text { Probability } & \text { Neighbourhood A } & \text { Neighbourhood B } \
\hline 0.25 & - \$ 22,500 & \$ 30,500 \
\hline 0.40 & \$ 10,000 & \$ 25,000 \
\hline 0.35 & \$ 40,500 & \$ 10,500 \
\hline
\end{array}$$
-Referring to Instruction 5.3,what is the total variance of value gain if you invest in both houses?

Quizplus · Accepted Answer

The Answer of Instruction 5.3
There are two houses with almost identical characteristics available for investment in two different neighbourhoods with drastically different demographic composition. The anticipated gain in value when the houses are sold in 10 years has the following probability distribution:
Returns
 $$\begin{array} { | c | c | c | } 
\hline \text { Probability } & \text { Neighbourhood A } & \text { Neighbourhood B } \
\hline 0.25 & - \$ 22,500 & \$ 30,500 \
\hline 0.40 & \$ 10,000 & \$ 25,000 \
\hline 0.35 & \$ 40,500 & \$ 10,500 \
\hline
\end{array}$$
-Referring to Instruction 5.3,what is the total variance of value gain if you invest in both houses?

Instruction 5 -Referring to Instruction 5