A project has a 50% chance of doubling your investment in 1 year and a 50% chance of losing half your money. What is the expected return on this investment project?
A) 0%
B) 25%
C) 50%
D) 75%

Name: A project has a 50% chance of doubling your investment in 1 year and a 50% chance of losing half your money. What is the expected return on this investment project? A) 0% B) 25% C) 50% D) 75%
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Question

Quizplus · Accepted Answer

E[r_p] = (.5)(100) + (.5)(-50) = 25%

A Project Has a 50% Chance of Doubling Your Investment