An investor is given the following investment alternatives and percentage rates of return: 22/11/200 Investment alteratives State-of-nature (Market condition) Medium High 10% 15% 12% 25% 18% 30% Low Regular Shares 7% Risky shares -10% Property -12% What decision should be made by the optimistic decision maker? What decision should be made by the conservative decision maker? Over the past 300 days, 150 days have been medium market conditions and 60 days have had high market condition. On the basis of these data what decision should be made under expected value? [6]

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
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An investor is given the
10041
nvestm2/11/ the following
investment alternatives and percentage rates of return:
State-of-nature (Market condition)
Medium
High
10%
15%
12%
25%
18%
30%
alternatives
Low
Regular Shares
7%
Risky shares -10%
Property
-12%
What decision should be made by the optimistic decision maker? What decision should be made by the conservative decision maker? Over the
past 300 days, 150 days have been medium market conditions and 60 days have had high market condition. On the basis of these data what
decision should be made under expected value? [6]
Transcribed Image Text:An investor is given the 10041 nvestm2/11/ the following investment alternatives and percentage rates of return: State-of-nature (Market condition) Medium High 10% 15% 12% 25% 18% 30% alternatives Low Regular Shares 7% Risky shares -10% Property -12% What decision should be made by the optimistic decision maker? What decision should be made by the conservative decision maker? Over the past 300 days, 150 days have been medium market conditions and 60 days have had high market condition. On the basis of these data what decision should be made under expected value? [6]
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