An investor is looking at three possible investments: growth stock,blue chip stock,or municipal bonds.The investment performance will vary depending on the investment market condition of Bull (market rising),flat,or Bear (market falling).The investment return for each investment for the corresponding market conditions is given below: $$\begin{array} { | l | l | l | l | }
\hline & \text { Bull } & \text { Flat } & \text { Bear } \
\hline \text { Growth Stock } & 20 & 1 & - 6 \
\hline \text { Blue Chip } & 9 & 8 & 0 \
\hline \text { Bonds } & 4 & 4 & 4 \
\hline
\end{array}$$
Which investment would the investor select if the maximax criterion is used?
A)Growth Stock
B)Blue Chip
C)Bonds

Question

An investor is looking at three possible investments: growth stock,blue chip stock,or municipal bonds.The investment performance will vary depending on the investment market condition of Bull (market rising),flat,or Bear (market falling).The investment return for each investment for the corresponding market conditions is given below: $$\begin{array} { | l | l | l | l | } 
\hline & \text { Bull } & \text { Flat } & \text { Bear } \
\hline \text { Growth Stock } & 20 & 1 & - 6 \
\hline \text { Blue Chip } & 9 & 8 & 0 \
\hline \text { Bonds } & 4 & 4 & 4 \
\hline
\end{array}$$
Which investment would the investor select if the maximax criterion is used?
A)Growth Stock
B)Blue Chip
C)Bonds

Quizplus · Accepted Answer

The maximax criterion involves selecting the option with the maximum possible payoff. Here, the Growth Stock has the highest potential return of 20% in a Bull market, making it the choice under the maximax criterion.

An Investor Is Looking at Three Possible Investments: Growth Stock,blue