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Concept of decision analysis in the existing environment

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A financial advisor has recommended three possible mutual funds for investment: Fund A, Fund B, and Fund C. The returns each will achieve depends on whether the economy is good, normal, or bad. A results table has been constructed to illustrate this situation:

Economic Condition (in million rupiah)
Investments Good Normal Bad
Funds A 100 20 -50
Funds B 60 40 0
Fund C 80 50 -20

a. Based on available information, use the concept of decision analysis in the existing environment with opportunity loss criteria to determine the best investment!

b. The advisor estimates the probability of good economic conditions of 0.5, normal conditions of 0.2 and bad economic conditions of 0.3. Based on available information, use the concept of decision analysis in the existing environment to determine the best investment!

Reference no: EM132701558

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