A venture capitalist, willing to invest $1,000,000$1,000,000, has three investments to choose from. The first investment, a software company, has a 20%20% chance of returning $5,000,000$5,000,000 profit, a 30%30% chance of returning $1,000,000$1,000,000 profit, and a 50%50% chance of losing the million dollars. The second company, a hardware company, has a 20%20% chance of returning $3,000,000$3,000,000 profit, a 35%35% chance of returning $1,000,000$1,000,000 profit, and a 45%45% chance of losing the million dollars. The third company, a biotech firm, has a 10%10% chance of returning $6,000,000$6,000,000 profit, a 60%60% of no profit or loss, and a 30%30% chance of losing the million dollars. (a) Construct a PDF for each investment. Enter the exact answers as fractions or decimals.

A venture capitalist, willing to invest $1,000,000$1,000,000, has three investments to choose from. The first investment, a software company, has a 20%20% chance of returning $5,000,000$5,000,000 profit, a 30%30% chance of returning $1,000,000$1,000,000 profit, and a 50%50% chance of losing the million dollars. The second company, a hardware company, has a 20%20% chance of returning $3,000,000$3,000,000 profit, a 35%35% chance of returning $1,000,000$1,000,000 profit, and a 45%45% chance of losing the million dollars. The third company, a biotech firm, has a 10%10% chance of returning $6,000,000$6,000,000 profit, a 60%60% of no profit or loss, and a 30%30% chance of losing the million dollars. (a) Construct a PDF for each investment. Enter the exact answers as fractions or decimals.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter7: Uncertainty

Section: Chapter Questions

Problem 7.3P

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