Math Solutions

[Solution] Suppose that one of your colleagues has $2000 available to invest. Assume that all of this money must be placed in one of three investments:

Question: Suppose that one of your colleagues has $2000 available to invest. Assume that all of this money must be placed in one of three investments: a particular money market fund, a stock, or gold. Each dollar your colleague invests in the money market fund earns a virtually guaranteed 6% annual return. Each dollar he invests in the stock earns an annual return characterized

by the probability distribution provided in the file P07_44 xlsx . Finally, each dollar he invests in gold earns an annual return characterized by the probability distribution given in the file.

  1. If your colleague must place all of his available funds in a single investment, which investment should he choose to maximize his expected earnings over the next year?
Investment data
Distribution of Annual Returns for Given Stock
Return Probability
0.00 0.10
0.06 0.20
0.12 0.40
0.18 0.20
0.24 0.10
Distribution of Annual Returns for Gold
Return Probability
-0.36 0.10
-0.12 0.20
0.12 0.40
0.36 0.20
0.60 0.10

Price: $2.99
Solution: The downloadable solution consists of 2 pages
Deliverable: Word Document


∴ Other downloads you may be interested in ∴

log in to your account

Forgot password?
Don't have a membership account?
REGISTER

reset password

Back to
log in

sign up

Back to
log in