# Probabilities

posted by
**Andrey L** on
.

An investor has $20,000 to invest in stocks. She can buy blue chip or specu-

lative stocks. If the market goes up the blue chips will pay o® $30,000 and speculative will

pay o® $50,000. If the market goes down, the blue chips will pay o® $10,000 and speculative

will pay o® $1,000. If the probability of the market going up is :4, then the expected pro¯t

for the best strategy is closest to?