Investment strategy. An engineer is planning an investment with a time horizon of from six to seven years. He is considering five different investments, as shown in the following table, and has estimated their annual percentage rate of return under four possible future states of the economy. He wants to undertake only one of the investments.
Check for dominance, and determine the ranking of the remaining actions on the basis of the following criteria:
(a) Laplace
(b) maximin
(c) maximax
(d) Hurwicz (show graph)
(e) minimax regret
Discuss your results; Which would you yourself choose, and why?
Growth: Inflation: | High High | High Low | Low Low | Low High |
a1: Two 3-ycar CD's | -2 | 11 | 1 | -2 |
a2: Mutual fund | 4 | 7 | 0 | -3 |
a3:Growth stock | 9 | 12 | -3 | -6 |
a4:7-year bond | -1 | 2 | 2 | -1 |
a5:30-year bond w/resale | -2 | 3 | 3 | -2 |
We need at least 10 more requests to produce the solution.
0 / 10 have requested this problem solution
The more requests, the faster the answer.