What is the best investment advice in this case

Assignment Help Physics

Reference no: EM131370913

An investor is considering two brokerage firms. One is a discount broker offering no investment advice, but charging only $50 for the amount the investor intends to invest. The other is a full-service broker who charges $200 for the amount of the intended investment. If the investor chooses the discount broker, there is a 0.45 chance of a $500 profit (before charges) over the period of the investment, a 0.35 chance of making only $200, and 0.20 chance of losing $100. If the investor chooses the full-service broker, then there is a 0.60 chance that the investment will earn $500, a 0.35 chance that it will earn $200, and a 0.05 chance that it will lose $100. What is the best investment advice in this case?

Reference no: EM131370913

Questions Cloud

Determine how much the water utility must purchase : We are in a drought, but people keep watering their lawns. The water company wants to know how much water it will need to supply. On average, the lawns in this city need 1 million gallons per day. But, if it rains, the rain might supply 0-2 million g..

What are the advantages of using a utility function : What are the advantages of using a utility function?

Why do you think a cio survey is important for the hmis : Why do you think a CIO survey is important for the HMIS industry?Compose a prediction of what type of hardware investments would be considered key to HMIS future. Why do you think the results showed investment in an electronic health record (EHR) p..

What is the expected number of tables sold per day : Show that the probabilities above form a proper probability distribution.- Find the cumulative distribution function of the number of Raffles tables sold daily.

What is the best investment advice in this case : If the investor chooses the full-service broker, then there is a 0.60 chance that the investment will earn $500, a 0.35 chance that it will earn $200, and a 0.05 chance that it will lose $100. What is the best investment advice in this case?

Prepare an income statement and classified balance sheet : CT 6- Transfer these accounts and balances to a spreadsheet worksheet and prepare an income statement, a classified balance sheet, and a statement of retained earnings, all in good form using proper headings for each statement.

Construct decision tree and determine the optimal decision : The test has a 90% reliability of correctly detecting the state of nature. Construct the decision tree and determine the optimal decision.

Describe general function of performance management system : Describe the general function of performance management systems. If your assigned company does not use a performance management system, would you recommend it use one? Why or why not?Suggest two job evaluation methods for each of the positions. Wha..

What is the optimal decision for the designer : What is the optimal decision for the designer?

User Account

All Pages