An investor plans to put $50,000 in one of four investments. The return on each investment depends on whether next year's economy is strong or weak. The following table summarizes the possible payoffs, in dollars, for the four investments. Certificate of deposit Office complex Land speculation Technical school Next year's economy Strong 7,000 15,000 32,500 6,000 Weak 7,000 4,500 - 17,000 12,000 9 Let V, W, X, and Y denote the payoffs for the certificate of deposit, office complex, land speculation, and technical school, respectively. Then V, W, X, and Y are random variables. Assume that next year's economy has a 30% chance of being strong and a 70% chance of being weak. a. Find the probability distribution of each random variable V, W, X, and Y. What is the probability distribution for V? V 7,000 P(V=v)

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An investor plans to put $50,000 in one of four investments. The return on each
investment depends on whether next year's economy is strong or weak. The
following table summarizes the possible payoffs, in dollars, for the four
investments.
Certificate
of deposit
Office
complex
Land
speculation
Technical
school
Next year's economy
Strong
7,000
15,000
32,500
6,000
Weak
7,000
4,500
- 17,000
12,000
Let V, W, X, and Y denote the payoffs for the certificate of deposit,
office complex, land speculation, and technical school, respectively.
Then V, W, X, and Y are random variables. Assume that next year's
economy has a 30% chance of being strong and a 70% chance of being
weak.
a. Find the probability distribution of each random variable V, W, X, and
Y.
What is the probability distribution for V?
V
7,000
P(V=v)
Transcribed Image Text:An investor plans to put $50,000 in one of four investments. The return on each investment depends on whether next year's economy is strong or weak. The following table summarizes the possible payoffs, in dollars, for the four investments. Certificate of deposit Office complex Land speculation Technical school Next year's economy Strong 7,000 15,000 32,500 6,000 Weak 7,000 4,500 - 17,000 12,000 Let V, W, X, and Y denote the payoffs for the certificate of deposit, office complex, land speculation, and technical school, respectively. Then V, W, X, and Y are random variables. Assume that next year's economy has a 30% chance of being strong and a 70% chance of being weak. a. Find the probability distribution of each random variable V, W, X, and Y. What is the probability distribution for V? V 7,000 P(V=v)
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