Posted by **Quenice** on Thursday, January 17, 2008 at 5:31pm.

Allen must decide whether to invest $10,000 in the stock market or in a certificate of deposit (CD) at an interest rate of 9%. If the market is good , he believes that he could get a 14% return on his money. With a fair market, he expects to get an 8% return. If the market is bad, he will most likely get no return at all-in other words, the return would be 0%,. Allen estimates hat the probability of a good market is 0.4, the probability of a fair market is 0.4, and the probability of a bad market is 0.2, and he wishes to maximaize his long-run average return. (a) Develop a decision table for this problem. (b) What is the best decision?

## Answer This Question

## Related Questions

- Business - Envision you have served as business manager for over two years. you ...
- Math - Using the formula. I =Prt ,calculate the simple interest where t=1/n and ...
- Math - I really need some help with this one. Envision that you have served as ...
- Math - Envision that you have served as business manager of Media World for over...
- Math - Envision that you have served as business manager of Media World for over...
- Math - Can someone steer me in the right direction? Here's the question. ...
- fin - 1. A financial institution has the following market value balance sheet ...
- algebra interest word problem - Erin Grabish recevied $2,000 for speaking at a ...
- Business Analysis / Investment - Help! I have had several solutions and cannot ...
- MATH - Mabel has $35,000 to invest in a certificate of deposit for 4 years. The ...

More Related Questions