A venture capitalist, willing to invest $1,000,000, has three investments to choose from: The first investment, a software company, has a 10 percent chance of returning $5,000,000 profit, a 30 percent chance of returning $1,000,000 profit, and a 60 percent chance of losing the million dollars. The second company, a hardware company, has a 20 percent chance of returning $3,000,000 profit, a 40 percent chance of returning $1,000,000 profit, and a 40 percent chance of losing the million dollars. The third company, a biotech firm , has a 10 percent chance of returning $6,000,000 profit, a 70 percent of no profit or loss, and a 20 percent chance of losing the million dollars. Find the expected value for each investment. The software company's expected value is $__ The hardware company's expected value is $___ The biotech firm's expected value is $___ Which investment has the highest expected return, on average? (software, hardware or biotech)
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
A venture capitalist, willing to invest $1,000,000, has three investments to choose from: The first investment, a software company, has a 10 percent chance of returning $5,000,000 profit, a 30 percent chance of returning $1,000,000 profit, and a 60 percent chance of losing the million dollars.
The second company, a hardware company, has a 20 percent chance of returning $3,000,000 profit, a 40 percent chance of returning $1,000,000 profit, and a 40 percent chance of losing the million dollars.
The third company, a biotech firm , has a 10 percent chance of returning $6,000,000 profit, a 70 percent of no profit or loss, and a 20 percent chance of losing the million dollars.
- Find the
expected value for each investment.
-
- The software company's expected value is $__
- The hardware company's expected value is $___
- The biotech firm's expected value is $___
Which investment has the highest expected return, on average? (software, hardware or biotech)
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