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An investor has two investment opportunities each involving an outlay of $10,000. The present value of possible outcomes and their respective probabilities are

Investment I Investment II

Outcome $4,000 $6,000 $3,000 $5,000 $7,000

Probability 0.6 0.4 0.4 0.3 0.3

(a) calculate the expected value of each investment.

(b) draw a bar chart for each investment.

(d) Determine which of the two investments the investor should choose.

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9748358

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