Question 21
You would like to invest in one of the three available
investment plans: money market, bonds, or stocks. The payoffs
(profits) of each plan under two possible future economic
conditions, PE (poor economy) and GE (good economy), are shown
below. The probability of the occurrence of PE is 0.4.
PE
GE
Money Market
2300
3600
Bonds
3100
2600
Stocks
1500
3500
In light of the expected value approach, the best decision
alternative is
a.
Money Market
b.
Bonds
c.
Stocks
d.
None of the above