Calculate the expected value of each investment

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Reference no: EM131409995

Question:

An investor has two investment opportunities, each involving an outlay of $10,000. The present value of possible outcomes and their respective probabilities are:

Investment I Investment II

Outcome $4,000 $6,000 $3,000 $5,000 $7,000

Probability 0.6 0.4 0.4 0.3 0.3

A. Calculate the expected value of each investment.

b. Draw a bar chart for each investment.

c. Calculate the standard deviation of each project.

d. Determine which of the two investments the investor should choose.

Reference no: EM131409995

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