Multiple Choice
Domingo has a total wealth of $500,000 composed of a house worth $100,000 and $400,000 in cash.He keeps the cash in a safe deposit box,so that it is completely safe.However,there is a 10% chance that his house will burn down by the end of the year and be worth nothing and a 90% chance that nothing will happen to it.Without insurance,the expected value of his end-of-year wealth is:
A) $410,000.
B) $450,000.
C) $490,000.
D) $485,000.
Correct Answer:
Verified
Correct Answer:
Verified
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