1. Your investment has a 20% chance of earning a 30% rate of return, a 50% chance of earning a 10% rate of return, and a 30% chance of losing 6%. What is your expected return on this investment?
A) 12.8% B) 9.2% C) 11% D) 8.9%
2. Suppose that the Fed decides to sell $200,000 worth of government securities in the open market. The result would be that
A) The monetary base will decrease by $200,000
B) The monetary base will not change
C) The monetary base will increase by $200,000
D) None of the above