Scenario: Buying Shares Jordi is considering buying shares in two companies, Apple and Microsoft.If he invests
$1,000 in Apple, there is a 40% probability that his investment will be worth only $800 and a 60% probability that it will be worth $1,200 at the end of one year.If he invests $500 in Apple, there is a 40% probability that his investment will be worth $400 and a 60% probability that it will be worth $600 at the end of the year.The corresponding numbers for investment in Microsoft are identical.
(Scenario: Buying Shares) Based on the information provided in the scenario Buying Shares, which of the following is true?
A) The probability that Jordi will make a gain is 60% if he invests $1,000 in either Apple or Microsoft.The probability that he will make a gain is 60% if he invests $500 apiece in Apple and in Microsoft.
B) The probability that Jordi will make a gain is 60% if he invests $1,000 in either Apple or Microsoft.The probability that he will make a gain is 84% if he invests $500 apiece in Apple and in Microsoft.
C) The probability that Jordi will make a gain is 76% if he invests $1,000 in either Apple or Microsoft.The probability that he will make a gain is 24% if he invests $500 apiece in Apple and in Microsoft.
D) The probability that Jordi will make a gain is 60% if he invests $1,000 in either Apple or Microsoft.The probability that he will make a gain is 36% if he invests
$500 apiece in Apple and in Microsoft.
Correct Answer:
Verified
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