Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 51

Ann Tyler has come into an inheritance from her grandparents. She is attempting to decide among several investment alternatives. The return after 1 year is primarily dependent on the interest rate during the next year. The rate is currently 7%, and Ann anticipates that it will stay the same or go up or down by at most two points. The various investment alternatives plus their returns ($10,000s), given the interest rate changes, are shown in the following table:
Determine the best investment, using the following decision criteria.
a. Maximax
b. Maximin
c. Equal likelihood