SOLUTION: There is a 40% chance that interest rates will rise, 10% they will stay the same and 50% chance they will decrease. You have 3 investment alternatives. CIBC fund will be worth $1

Algebra.Com
Question 915355: There is a 40% chance that interest rates will rise, 10% they will stay the same and 50% chance they will decrease. You have 3 investment alternatives. CIBC fund will be worth $18000 if rates rise, $14000 if rates are unchanged and $10000 if rates decrease. RBC fund will be worth $22000 if rates increase, $12000 if rates are unchanged and $6000 if rates decrease. CSB will be worth 15000 under all 3 scenarios. Based on the EMV and EOL theory decide with is the best fund.

thank you!!!!
Answer by ewatrrr(24785)   (Show Source): You can put this solution on YOUR website!
 

Hi

HIGHLY recommend table with totals in YOur work: C1 is the 1st column

	CIBC	C1*C2	RBC	C1*C4	CSB	C1*C6

0.4	18000	7200	22000	8800	15000	6000

0.1	14000	1400	12000	1200	15000	1500

-0.5	10000	-5000	6000	-3000	15000	-7500

EMV		3600		7000		0

 

RELATED QUESTIONS


In a certain​ city, projections for the next year indicate there is a​ 20% chance... (answered by ikleyn)

The owner of an antique store estimates that there is a 40% chance she will make $2000... (answered by stanbon)

Mandy is considering a lawsuit against a chemical company. Erin, her lawyer, estimated... (answered by solver91311)

Mandy is considering bringing a lawsuit against a chemical company. Erin, her lawyer,... (answered by solver91311)

Joseph and Mikky are both studying for an exam. They feel that Joseph has a 55% chance of  (answered by Theo)

Don Vello is considering bringing a lawsuit against the Dummote Chemical company. His... (answered by lynnlo)

Don Vello is considering bringing a lawsuit against the Dummote Chemical company. His... (answered by lynnlo)

The Meteorological Department of Florida has determined that there is a 30% chance that... (answered by ewatrrr)

A student is graduating from their university and has applied to jobs at company A and B.  (answered by rothauserc)