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4. Asila, a small investor, has 2000 rials to invest. She has three choices, namely Bank Muscat, Bank Dofar, and Oman Arab bank stocks, but she want to invest in only one stock. She estimated that, if her 2000 rials were invested in Bank Muscat and a strong bull market developed by the end of the year, the value of her stock expected to be double to 4000 rials. However, if there were a bear market, the value could conceivably drop to 1000 rials by the end of the year. Her predictions regarding the value of her 2000 rials investment for the three stocks for a bull market and for a bear market are shown in the table below along with the chance for bull market. Bull Market Bear Market Chances of bull market S2 Stocks P Bank Muscat 4000 1000 0.6 Bank Dofar 4500 800 0.65 Oman Arab bank 5000 100 0.55 Draw a decision tree, and suggest the suitable stock for Asila.

4. Asila, a small investor, has 2000 rials to invest. She has three choices, namely Bank Muscat, Bank Dofar, and Oman Arab bank stocks, but she want to invest in only one stock. She estimated that, if her 2000 rials were invested in Bank Muscat and a strong bull market developed by the end of the year, the value of her stock expected to be double to 4000 rials. However, if there were a bear market, the value could conceivably drop to 1000 rials by the end of the year. Her predictions regarding the value of her 2000 rials investment for the three stocks for a bull market and for a bear market are shown in the table below along with the chance for bull market. Bull Market Bear Market Chances of bull market S2 Stocks P Bank Muscat 4000 1000 0.6 Bank Dofar 4500 800 0.65 Oman Arab bank 5000 100 0.55 Draw a decision tree, and suggest the suitable stock for Asila.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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4. Asila, a small investor, has 2000 rials to invest. She has three choices, namely Bank Muscat, Bank Dofar, and Oman Arab bank stocks, but she want to invest in only one stock. She estimated that, if her 2000 rials were invested in Bank Muscat and a strong bull market developed by the end of the year, the value of her stock expected to be double to 4000 rials. However, if there were a bear market, the value could conceivably drop to 1000 rials by the end of the year. Her predictions regarding the value of her 2000 rials investment for the three stocks for a bull market and for a bear market are shown in the table below along with the chance for bull market. Stocks Bull Market Bear Market Chances of bull market S2 P Bank Muscat 4000 1000 0.6 Bank Dofar 4500 800 0.65 Oman Arab bank 5000 100 0.55 Draw a decision tree, and suggest the suitable stock for Asila.
Transcribed Image Text:4. Asila, a small investor, has 2000 rials to invest. She has three choices, namely Bank Muscat, Bank Dofar, and Oman Arab bank stocks, but she want to invest in only one stock. She estimated that, if her 2000 rials were invested in Bank Muscat and a strong bull market developed by the end of the year, the value of her stock expected to be double to 4000 rials. However, if there were a bear market, the value could conceivably drop to 1000 rials by the end of the year. Her predictions regarding the value of her 2000 rials investment for the three stocks for a bull market and for a bear market are shown in the table below along with the chance for bull market. Stocks Bull Market Bear Market Chances of bull market S2 P Bank Muscat 4000 1000 0.6 Bank Dofar 4500 800 0.65 Oman Arab bank 5000 100 0.55 Draw a decision tree, and suggest the suitable stock for Asila.
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