When it comes to investing in gold or the stock market it would be ideal to review the expected values to better understand which would be a better investment. The expected value for the stock market is calculated by doing the following:
.15 * 25 + .35 * 20 + .25 * 5 + .25 + (14) = 8.5%
On the other hand, the expected value for the gold market is calculated by doing the following:
.15 * (-30) + .35 * (-9) + .25 * 35 + .25 * 50= 13.6%
If I had to decide which investment would be sounder and produce a better return on investment (ROI), I would choose to invest in the gold market. It appears that the ROI is substantially higher at 13.36% than 8.5% of the stock market.
Find O for both Gold and Stocks and compare them. Does O makes any difference in making investment options?
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