The economy will either be in a state of prosperity or recession and the probability of either is uncertain. A company wishes to invest in one of three ventures.
At what probability would you be indifferent between venture A
& B?
Homework Answers
Let at probability p, both will be same. Then:
Mean of A = Mean of B
5p - 2(1 - p) = 2p + 1(1 - p)
p = 0.50
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