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

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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	Maximum
Bonds	9	10	-1	2	10
Stocks	15	9	5	-4	15
Deposits	6	6	4	4	6

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

math Statistics-And-Probability

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Answer 1

Answer #1

b)

from given data:

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

since maximum of minimum growth rate is under decision: Deposits

therefore one should choose, Deposits decision under pessimistic Maximin Rule

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Answer 2

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