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Module 1 chp 7 problem 44 part a

# Module 1 chp 7 problem 44 part a - Informtion needed for...

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placed in one of three investments: a particular money. market fund, a stock, or gold. Each dollar your colleague invests in the money market fund earns a virtually guaranteed 6% annual return. Each dollar he invests in the stock earns an annual return characterized by the probability distribution provided in the information below. Finally each dollar he invests in gold earns an annual return characterized by the probability distribution given. should he choose to maximize his expected earnings over the next year?
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Unformatted text preview: Informtion needed for problem below: Investment data Distribution of Annual Returns for Given Stock Return Probability 0.00 0.10 0.06 0.20 0.12 0.40 0.18 0.20 0.24 0.10 Distribution of Annual Returns for Gold Return Probability-0.36 0.10-0.12 0.20 0.12 0.40 0.36 0.20 0.60 0.10 44. Suppose that one of your colleagues has \$2000 available to invest. Assume that all of this money must be A. If your colleague must place all of his available funds in a single investment, which investment...
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