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A company had a choice of three investment schemes. Option I gives a sure $30,000 return on investment. Option II gives a 50 percent chance of returning $50,000, and a 50 percent chance of returning nothing. Option III gives a 10 percent chance of returning $100,000 and a 90 percent chance of returning nothing. Which option should the company choose?

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A company had a choice of three investment schemes. Option I gives a sure $30,000 return on investment. Option II gives a 50 percent chance of returning $50,000, and a 50 percent chance of returning nothing. Option III gives a 10 percent chance of returning $100,000 and a 90 percent chance of returning nothing. All of the above answers are correct.

Collective investment schemes are frequently referred to as "funds," "mutual funds," and "investment funds." They invest in securities such as bonds, equities, or cash. The complete holdings of the fund are referred to as a portfolio, and a certified fund manager is in charge of managing it. Your money is dispersed throughout the entire portfolio of assets held by the fund along with the money of other participants. The number of units you own in a fund determines how much of the fund's total assets—including any potential income and capital growth—you really own. Each unit represents one dollar invested in a fund. The values of these units fluctuate since the underlying value of the assets and the fund's overall value are cyclical.

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