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 ->  Probability-and-statistics -> 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      Log On


   

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) About Me  (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