Return characterized by probability distribution given file

Reference no: EM13338023

Suppose that one of your colleagues has $2000 available to invest.Assume that all of this money must be placed in one of threeinvestments: a particular money market fund, a stock, or gold. Eachdollar your colleague invests in the money market fund earns avirtually guaranteed 6% annual return. Each dollar he invests in the stock earns an annual return characterized by theprobability distribution provided in the file P07_44.xlsx. Finally, each dollar he invests in gold earns anannual return characterized by the probability distribution givenin the file.

a. If your colleague must place all of his available funds in asingle investment, which investment should he choose to maximize his expected earnings over the nextyear?

Reference no: EM13338023

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