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| Teaching Since: | Apr 2017 |
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MBA,PHD in Psychology
Northwest Florida State College
Jun-1992 - May-1997
Professor
Northwest Florida State College,
Aug-2006 - Nov-2015
Suppose that two investments have the same three payoffs, but the probability associated with each payoff differs, as illustrated in the table below:
|
Payoff |
Probability Investment A) |
Probability Investment B) |
|
$300 |
0.1 |
0.3 |
|
$250 |
0.8 |
0.4 |
|
$200 |
0.1 |
0.3 |
a. Find the expected return and standard deviation of each investment.
b. Jill has the utility function U = 51,where I denotes the payoff. Which investment will she choose?
c. Ken has the utility function U= 5.Ji .Which investment will he choose?
d. Laura has the utility function U = 512. Which investment will she choose?
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