Exhibit 14.3
The following questions are based on the information below.
An investor is considering 4 investments,A,B,C and leaving his money in the bank.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can expand or decline.The following payoff matrix has been developed for the decision problem.The investor has estimated the probability of a declining economy at 70% and an expanding economy at 30%.

-Refer to Exhibit 14.3.What is the expected monetary value of Investment A?
A)34.
B)30.
C)20.
D)15.

Question

Exhibit 14.3
The following questions are based on the information below.
An investor is considering 4 investments,A,B,C and leaving his money in the bank.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can expand or decline.The following payoff matrix has been developed for the decision problem.The investor has estimated the probability of a declining economy at 70% and an expanding economy at 30%.
 
-Refer to Exhibit 14.3.What is the expected monetary value of Investment A?
A)34. 
B)30. 
C)20. 
D)15.

Quizplus · Accepted Answer

The Answer of Exhibit 14.3
The following questions are based on the information below.
An investor is considering 4 investments,A,B,C and leaving his money in the bank.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can expand or decline.The following payoff matrix has been developed for the decision problem.The investor has estimated the probability of a declining economy at 70% and an expanding economy at 30%.
 
-Refer to Exhibit 14.3.What is the expected monetary value of Investment A?
A)34. 
B)30. 
C)20. 
D)15.

Exhibit 14.3 The Following Questions Are Based on the Information Below