4. Are the following statements made under condition of risk, certainty, or unce

Question

4. Are the following statements made under condition of risk, certainty, or uncertainty? a. "The investment proposal I am considering have equally likely chances of tripling my money or losing 50% of my investment." b. These 20,000 lbs of raw materials will yield 550 finished products. C. "Depending on business conditions, our firm will either make or lose money this year." "I know that 20 percent of our accounts are past due. If I select one at random, there is a 0.20 chance that it will be past due." "If I deposit P10,000 in a savings account, the bank will pay me the prevailing rate. d. e.

Explanation / Answer

A. Risk. As there is equal chance of gaining or losing money.

B. Certain. It is a fact and is bound to happen.

C. Uncertain. Business conditions are completely unknown. The gain or loss is dependent on the business conditions. Hence it is uncertain.

D. Risk. There is chances of selecting accounts which are due and which are not.

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