Consider the Following Two Investment Alternatives

Multiple Choice

Consider the following two investment alternatives. First, a risky portfolio that pays 20% rate of return with a probability of 60% or 5% with a probability of 40%. Second, a Treasury bond that pays 6%. If you invest $50 000 in the risky portfolio, your expected profit would be ________.

A) $3 000
B) $7 000
C) $7 500
D) $10 000