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If I invest $1000 in company A, there's a 40% chance I'll double my money, and a 60% chance I'll lose half my money. Those are the only two possibilities. What's the expected monetary value of investing $1000 in company A

Respuesta :

anthougo

The expected monetary value of the investment of $1,000 in Company A is $800.

Data and Calculations:

Cost of investment in Company A = $1,000

Probability of doubling investment = 40%

Probability of losing investment = 60%

Expected monetary value of investment = $800 ($2,000 x 40% + $0 x 60%)

Thus, the expected monetary value of the investment is $800.

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