Question

Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of return for Plan A over Plan B?
$28,800
$4,000
$4,800
$35,200

The belief that investors require a higher return to entice them into holding long-term securities is the viewpoint of the
the expectations hypothesis.
segmentation theory.
the liquidity premium theory.
market credit crunch theory.

At age 5, how much would you have to save per month to have $1 million in your account at age 65, if your investment rate was 10% per year? Assume no taxes and compounding on a monthly basis.
$213.30
$21.23
$274.60
can't be done with these assumptions.

Answer 1

Under normal conditions (70% probability), Financing Plan A will produce $24,000 higher return than Plan B. Under tight money conditions (30% probability), Plan A will produce $40,000 less than Plan B. What is the expected value of return for Plan A over Plan B?

0.7*24,000 + 0.3*(-40,000) = $4800

You have already posted questiuon 3 elsewhere, and it has been answered there.
$28,800
$4,000
$4,800
$35,200