# Probability

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There are three investment plans for your consideration. Each plan calls for an investment of \$25,000 and the return will be one year later. Plan A will return \$27,500. Plan B will return \$27,000 or \$28,000 with probabilities of 0.4 and 0.6, respectively. Plan C will return \$24,000, \$27,000, or \$33,000 with probabilities of 0.2, 0.5, and 0.3, respectively. If your objective is to maximize the expected return, which plan should you choose?

• Probability -

27*.4 + 28*.6 = 27.6 (better than Plan A)
24*.2 + 27*.5 + 33* .3 = 28.2 (best of all)

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