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1. (5 pts) The following payoff table represents growth rates associated with 3 possible investments in...

1. (5 pts) The following payoff table represents growth rates associated with 3 possible investments in stocks, bonds, or bank deposits under various economic growth scenarios.

Economic Scenarios
Hi Growth Med Growth Low Growth No Growth
Bonds 9 10 -1 2
Stocks 15 9 5 -4
Deposits 6 6 4 4

a. Write the best decision using the optimistic Maximax Rule.

b. Write the best decision using the pessimistic Maximin Rule.

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Answer #1

1. 20.00 15.00 10.00 Bonds Stocks +Deposits 5.00 Hi Growth Med Growth Low Growth No Growth -5.00

a. Stocks
b. Deposits

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