Paul Hunt is considering two business ventures. The anticipated returns (in thousands of dollars) of each venture are described by the following probability distributions.Venture AEarningsProbability-300.4500.3600.3Venture BEarningsProbability-150.1200.4300.5(a) Compute the mean and variance for Venture A.meandollarsvariancedollars?Compute the mean and variance for Venture B.meandollarsvariancedollars?(b) Which investment would provide Paul with the highest expected return (the greater mean)?Venture AVenture B(c) In which investment would the element of risk be less (that is, which probability distribution has the smaller variance)?Venture AVenture B

We have the probability distribution of Earnings of Venture A and Venture B.

Paul Hunt is considering two business ventures. The anticipated returns (in thousands of dollars) of each venture are described by the following probability distributions. Venture A Earnings Probability -30 0.4 50 0.3 60 0.3 Venture B Earnings Probability -15 0.1 20 0.4 30 0.5 (a) Compute the mean and variance for Venture A. mean dollars variance dollars2 Compute the mean and variance for Venture B. mean dollars variance dollars? (b) Which investment would provide Paul with the highest expected return (the greater mean)? O Venture A O Venture B (c) In which investment would the element of risk be less (that is, which probability distribution has the smaller variance)? O Venture A O Venture B

Paul Hunt is considering two business ventures. The anticipated returns (in thousands of dollars) of each venture are described by the following probability distributions. Venture A Earnings Probability -30 0.4 50 0.3 60 0.3 Venture B Earnings Probability -15 0.1 20 0.4 30 0.5 (a) Compute the mean and variance for Venture A. mean dollars variance dollars2 Compute the mean and variance for Venture B. mean dollars variance dollars? (b) Which investment would provide Paul with the highest expected return (the greater mean)? O Venture A O Venture B (c) In which investment would the element of risk be less (that is, which probability distribution has the smaller variance)? O Venture A O Venture B

A First Course in Probability (10th Edition)

10th Edition

ISBN:9780134753119

Author:Sheldon Ross

Publisher:Sheldon Ross

Chapter1: Combinatorial Analysis

Section: Chapter Questions

Problem 1.1P: a. How many different 7-place license plates are possible if the first 2 places are for letters and...

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Question

Paul Hunt is considering two business ventures. The anticipated returns (in thousands of dollars) of each venture are described by the following probability distributions.
Venture A
Earnings
Probability
-30
0.4
50
0.3
60
0.3
Venture B
Earnings
Probability
-15
0.1
20
0.4
30
0.5
(a) Compute the mean and variance for Venture A.
mean
dollars
variance
dollars?
Compute the mean and variance for Venture B.
mean
dollars
variance
dollars?
(b) Which investment would provide Paul with the highest expected return (the greater mean)?
Venture A
Venture B
(c) In which investment would the element of risk be less (that is, which probability distribution has the smaller variance)?
Venture A
Venture B

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