An investor is considering a $100,000 investment in a developing country that has the potential to return $75,000 with a 0.75 probability, but there is a 0.25 probability that a military coup, will result in a return $0. Purchasing political insurance for $18,750 will lead to an expected return of _____________________ with or without insurance, but reduces the standard deviation from _________ to ____________.

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     $56,250; $32,476; $16,000
      $75,000; $32,476; $0
      $56,250; $32,476; $0.
      $75,000; $16,000; $0
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

0 votes
$56,250; $32,476; $0.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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