Describe a solution under a conservative approach

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Assignment:

Buying a house is the single largest investment for most families, and it is usually financed with a 30-year mortgage. If you think about it, there are many uncertainties and different scenarios to consider. For instance, the mortgage itself could be at a fix rate or a flexible rate. The economy could go up, or down or remain stable for the time you must repay the mortgage. The size of your home depends on the size of your family, and it is not entirely sure how many kids you will have. Job stability is not guaranteed and even a re-location may happen before anyone pays for their home, so the re-selling price is an important factor, but this is also unknown. Using the tools learned in decision analysis, how would you.

a. set up the problem for a home buyer

b. describe a solution under an optimistic approach

c. describe a solution under a conservative approach

d. describe a solution under a minimax regret approach

e. describe a solution under the expected value approach

Reference no: EM133209951

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