SCENARIO 5-11
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:
-Referring to Scenario 5-11, if your investment preference is to minimize the amount of risk that
you have to take and do not care at all about the expected return, will you choose a portfolio that
will consist of 10%, 30%, 50%, 70%, or 90% of your money on the house in neighborhood A and
the remaining on the house in neighborhood B?

Question

SCENARIO 5-11
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: 
-Referring to Scenario 5-11, if your investment preference is to minimize the amount of risk that
you have to take and do not care at all about the expected return, will you choose a portfolio that
will consist of 10%, 30%, 50%, 70%, or 90% of your money on the house in neighborhood A and
the remaining on the house in neighborhood B?

Quizplus · Accepted Answer

The Answer of SCENARIO 5-11
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: 
-Referring to Scenario 5-11, if your investment preference is to minimize the amount of risk that
you have to take and do not care at all about the expected return, will you choose a portfolio that
will consist of 10%, 30%, 50%, 70%, or 90% of your money on the house in neighborhood A and
the remaining on the house in neighborhood B?

SCENARIO 5-11 There Are Two Houses with Almost Identical Characteristics Available for Available