# Probabilities

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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?

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