Question

An investment counselor calls with a hot stock tip. He believes that if the economy remains​ strong, the investment will result in a profit of ​$40 comma 000. If the economy grows at a moderate​ pace, the investment will result in a profit of ​$20 comma 000. ​However, if the economy goes into​ recession, the investment will result in a loss of ​$40 comma 000. You contact an economist who believes there is a 20​% probability the economy will remain​ strong, a 70​% probability the economy will grow at a moderate​ pace, and a 10​% probability the economy will slip into recession. What is the expected profit from this​ investment? The expected profit is ​$ nothing. ​(Type an integer or a​ decimal.)

Answer 1