# Statistic class forum

*label*Mathematics

*timer*Asked: Jan 17th, 2019

*account_balance_wallet*$10

### Question Description

Hey, how are you doing?

Here is another question to the forum you did last week. Can you help me with this one?

Suppose that the percentage annual return you obtain when you invest a dollar in gold or the stock market is dependent on the general state of the national economy as indicated below. For example, the probability that the economy will be in "boom" state is 0.15. In this case, if you invest in the stock market your return is assumed to be 25%; on the other hand if you invest in gold when the economy is in a "boom" state your return will be minus 30%. Likewise for the other possible states of the economy. Note that the sum of the probabilities has to be 1--and is.

State of economy | Probability | Market Return | Gold Return |

Boom | 0.15 | 25% | (-30%) |

Moderate Growth | 0.35 | 20% | (-9%) |

Week Growth | 0.25 | 5% | 35% |

No Growth | 0.25 | (-14%) | 50% |

If you were going to invest your money in one of these two investments, would you be comfortable only looking at the expected return? How could you quantify the risk?

## Tutor Answer

Please let me know if there is anything needs to be changed or added. I will be also appreciated that you can let me know i...

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