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Suppose Nara Could Invest Her $1000 in a Savings Account

Question 216

Multiple Choice

Suppose Nara could invest her $1000 in a savings account or she could invest in the stock market. After one year, the savings account has a guaranteed 5 percent interest rate and the stock market has a 10 percent chance of tripling her money, and 90 percent chance of losing it all. What is Nara's expected wealth if she places her money in the savings account?


A) $1,050
B) $50
C) $300
D) $1,300

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