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Suppose Nara Could Invest Her $1000 in a Savings Account

Question 218

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 the difference in Nara's expected wealth between these two options?


A) $1050
B) $300
C) $750
D) $50

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