An investor is considering 4 investments,A,B,C,D.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can be weak or strong.The investor has estimated the probability of a declining economy at 30% and an expanding economy at 70%.Draw the decision tree for this problem and determine the correct decision for this investor based on the expected monetary value criteria.
Payoff Matrix Economy
$$\begin{array} { c c c }
\text { Investment } & \text { Weak } & \text { Strong } \
\hline \text { A } & - 30 & 120 \
\text { B } & 20 & 60 \
\text { C } & 30 & 35 \
\text { D } & 15 & 30
\end{array}$$

Question

An investor is considering 4 investments,A,B,C,D.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can be weak or strong.The investor has estimated the probability of a declining economy at 30% and an expanding economy at 70%.Draw the decision tree for this problem and determine the correct decision for this investor based on the expected monetary value criteria.
Payoff Matrix Economy
 $$\begin{array} { c c c } 
\text { Investment } & \text { Weak } & \text { Strong } \
\hline \text { A } & - 30 & 120 \
\text { B } & 20 & 60 \
\text { C } & 30 & 35 \
\text { D } & 15 & 30
\end{array}$$

Quizplus · Accepted Answer

The Answer of An investor is considering 4 investments,A,B,C,D.The payoff from each investment is a function of the economic climate over the next 2 years.The economy can be weak or strong.The investor has estimated the probability of a declining economy at 30% and an expanding economy at 70%.Draw the decision tree for this problem and determine the correct decision for this investor based on the expected monetary value criteria.
Payoff Matrix Economy
 $$\begin{array} { c c c } 
\text { Investment } & \text { Weak } & \text { Strong } \
\hline \text { A } & - 30 & 120 \
\text { B } & 20 & 60 \
\text { C } & 30 & 35 \
\text { D } & 15 & 30
\end{array}$$

An Investor Is Considering 4 Investments,A,B,C,D