What is the expected value of an original investment of $3,000 that has a 10% chance of ending up with a value of $2,000, an 80% chance of ending up with a value of $3,500, and a 10% chance of ending up with a value of $4,000?

a $6,000

b. $3,500

c $3,400

d. $3,250

e $3,000

Option C.

Step-by-step explanation:

The original value of  Investment = $3,000

It has a 10% chance of ending up with a value of $2,000.

Chances of loss of $1000 = 0.1

It has a 80% chance of ending up with a value of $3,500.

Chances of profit of $500 = 0.8

It has a 10% chance of ending up with a value of $4,000.

Chances of profit of $1000 = 0.1

Expected change in the value of investment is

The expected change in the value of the investment is $400.

The expected value of an original Investment of $3,000 is

Therefore, the correct option is C.

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