Need help with Statistics Problem - 250 words

Dec 8th, 2015
Anonymous
Category:
Accounting
Price: $10 USD

Question description

Original and no plagiarism - 1 reference needed

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%

Based on the expected return, would you rather invest your money in the stock market or in gold? Why?


Tutor Answer

(Top Tutor) Studypool Tutor
School: University of Maryland

Studypool has helped 1,244,100 students

Review from student
Studypool Student
" The best tutor out there!!!! "
Ask your homework questions. Receive quality answers!

Type your question here (or upload an image)

1831 tutors are online

Brown University





1271 Tutors

California Institute of Technology




2131 Tutors

Carnegie Mellon University




982 Tutors

Columbia University





1256 Tutors

Dartmouth University





2113 Tutors

Emory University





2279 Tutors

Harvard University





599 Tutors

Massachusetts Institute of Technology



2319 Tutors

New York University





1645 Tutors

Notre Dam University





1911 Tutors

Oklahoma University





2122 Tutors

Pennsylvania State University





932 Tutors

Princeton University





1211 Tutors

Stanford University





983 Tutors

University of California





1282 Tutors

Oxford University





123 Tutors

Yale University





2325 Tutors