The 3 × 3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $ 3000 , stock B by $ 6000 and stock C by $ 15000 . But if the economic growth during the coming year is average, then stock A should increase in value by $ 2000 , stock B by $ 2000 and stock C by $ 1000 . Also, if the economic growth during the coming year is weak, then stock A should increase in value by $ 1000 , stock B should decrease in value by $ 3000 and stock C should decrease in value by $ 10 , 000 .

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Answer 1

Question

Chapter 9, Problem 14RE

(a)

To determine

The 3×3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

(b)

To determine

To calculate: The investor’s optimal strategy if he wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

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Answer 2

Question

Chapter 9, Problem 14RE

(a)

To determine

The 3×3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

(b)

To determine

To calculate: The investor’s optimal strategy if he wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

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Answer 3

Question

Chapter 9, Problem 14RE

(a)

To determine

The 3×3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

(b)

To determine

To calculate: The investor’s optimal strategy if he wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

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Answer 4

Question

Chapter 9, Problem 14RE

(a)

To determine

The 3×3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

(b)

To determine

To calculate: The investor’s optimal strategy if he wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

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Answer 5

Chapter 9, Problem 14RE

(a)

To determine

The 3×3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

(b)

To determine

To calculate: The investor’s optimal strategy if he wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

Answer 6

Chapter 9, Problem 14RE

(a)

To determine

The 3×3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

Answer 7

Chapter 9, Problem 14RE

(a)

To determine

The 3×3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

Answer 8

(b)

To determine

To calculate: The investor’s optimal strategy if he wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

Answer 9

(b)

To determine

To calculate: The investor’s optimal strategy if he wants to purchase one of three stocks. Stock A is regarded as conservative, stock B as speculative and stock C has highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000 and stock C by $15000. But if the economic growth during the coming year is average, then stock A should increase in value by $2000, stock B by $2000 and stock C by $1000. Also, if the economic growth during the coming year is weak, then stock A should increase in value by $1000, stock B should decrease in value by $3000 and stock C should decrease in value by $10,000.

Answer 10

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Answer 11

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Answer 12

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Answer 13

Ch. 9.1 - Solutions can be found following the section...Ch. 9.1 - Prob. 2CYU Ch. 9.1 - Prob. 3CYU Ch. 9.1 - Prob. 1E Ch. 9.1 - Prob. 2E Ch. 9.1 - Prob. 3E Ch. 9.1 - Prob. 4E Ch. 9.1 - In Exercises 1–12, determine the optimal pure...Ch. 9.1 - In Exercises 1–12, determine the optimal pure...Ch. 9.1 - Prob. 7E

Solution Summary: The author explains the 3times 3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth if an investor wants to purchase one of three stocks.

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