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The matrix below contains payoffs and their associated probabilities for four alternative investments, each requiring the same initial cash outlay. Investment Payoff Matrix I1 -$500 $190 $300 I2 -$200 $ 50 $300 I3 -$300 $100 $250 I4 -$ 40 $ 70 $180 Probabilities 0.2 0.5 0.3 The investment with the largest expected payoff is a. I3 b. I2 c. I4 d. I1

The matrix below contains payoffs and their associated probabilities for four alternative investments, each requiring the same initial cash outlay. Investment Payoff Matrix I1 -$500 $190 $300 I2 -$200 $ 50 $300 I3 -$300 $100 $250 I4 -$ 40 $ 70 $180 Probabilities 0.2 0.5 0.3 The investment with the largest expected payoff is a. I3 b. I2 c. I4 d. I1

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
Problem 1PS
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The matrix below contains payoffs and their associated probabilities for four alternative investments, each requiring the same initial cash outlay.

Investment

Payoff Matrix

I1

-$500

$190

$300

I2

-$200

$ 50

$300

I3

-$300

$100

$250

I4

-$ 40

$ 70

$180

Probabilities

0.2

0.5

0.3
The investment with the largest expected payoff is
a. I3
b. I2
c. I4
d. I1
The matrix below contains payoffs and their associated probabilities for four alternative investments, each requiring the same initial cash outlay. Investment Payoff Matrix 11 -$500 $190 S300 12 -$200 $ 50 $300 13 -$300 $100 $250 14 -$ 40 S 70 $180 Probabilities 0.2 0.5 0.3 The investment with the largest expected payoff is O a. 13 O b. 12 O c. 14 O d. 1
Transcribed Image Text:The matrix below contains payoffs and their associated probabilities for four alternative investments, each requiring the same initial cash outlay. Investment Payoff Matrix 11 -$500 $190 S300 12 -$200 $ 50 $300 13 -$300 $100 $250 14 -$ 40 S 70 $180 Probabilities 0.2 0.5 0.3 The investment with the largest expected payoff is O a. 13 O b. 12 O c. 14 O d. 1
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