How much should philip be willing to pay to obtain a market

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Reference no: EM13251830

One of Philip Mahn's investments is going to mature, and he wants to determine how to invest the proceeds of $30,000. Philip is considering two new investments: a stock mutual fund and a one-year certificate of deposit (CD). The CD is guaranteed to pay an 8% return. Philip estimates the return on the stock mutual fund as 16%, 9%, or -2%, depending on whether market conditions are good, average, or poor, respectively. Philip estimates the probability of a good, average, and poor market to be 0.1, 0.85, and 0.05, respectively. Construct a payoff matrix.

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How much should Philip be willing to pay to obtain a market forecast that is 100% accurate?

Reference no: EM13251830

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