You have $1,000 to invest and are considering buying some combination of the shares of two companies, Donkeylnc a Shares of Donkeylnc will pay a return of 12 percent if the Democrats are elected, an event you believe to have a 40 pe probability; otherwise the shares pay a zero return. Shares of Elephantinc will pay 10 percent if the Republicans are elc probability of 60 percent), zero otherwise. Either the Democrats or the Republicans will be elected. Instructions: Enter your response as percentage rounded to one decimal place. a. If your only concern is maximizing your average expected return, with no regard for risk, you should invest your $1,0 Elephantinc. and your expected return will be %. b. What is your expected return if you invest $500 in each stock? (Hint: Consider what your return will be if the Democr the Republicans win, then weight each outcome by the probability that event occurs.) Instructions: Enter your response as percentage rounded to two decimal places.
You have $1,000 to invest and are considering buying some combination of the shares of two companies, Donkeylnc a Shares of Donkeylnc will pay a return of 12 percent if the Democrats are elected, an event you believe to have a 40 pe probability; otherwise the shares pay a zero return. Shares of Elephantinc will pay 10 percent if the Republicans are elc probability of 60 percent), zero otherwise. Either the Democrats or the Republicans will be elected. Instructions: Enter your response as percentage rounded to one decimal place. a. If your only concern is maximizing your average expected return, with no regard for risk, you should invest your $1,0 Elephantinc. and your expected return will be %. b. What is your expected return if you invest $500 in each stock? (Hint: Consider what your return will be if the Democr the Republicans win, then weight each outcome by the probability that event occurs.) Instructions: Enter your response as percentage rounded to two decimal places.
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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