Solution-Find the expected profit and variance of option

Find the expected profit and variance of option

Reference no: EM132855964

Tom received a Php 100,000 cash award for his winning project in a science fair. His parents decided to invest his money. The family's financial advisor presented two investment options:

-Investment A was a risk-free investment where they stood to gain Php 5,000 and lose nothing.

-Investment B offered a gain of Php 9,000 with 2/3 probability and a loss of Php 6,000 with 1/3 probability.a.) Find the probability mass function for each of the two investment options.

b.) Find the expected profit and variance of each option.

c.) Determine which investment will give a higher expected profit.

Reference no: EM132855964

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Find the expected profit and variance of option

Reference no: EM132855964

Reference no: EM132855964

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