Reference no: EM131710350

Question: An investor is considering two brokerage firms. One is a discount broker offering no investment advice, but charging only $50 for the amount the investor intends to invest. The other is a full-service broker who charges $200 for the amount of the intended investment. If the investor chooses the discount broker, there is a 0.45 chance of a $500 profit (before charges) over the period of the investment, a 0.35 chance of making only $200, and 0.20 chance of losing $100. If the investor chooses the full-service broker, then there is a 0.60 chance that the investment will earn $500, a 0.35 chance that it will earn $200, and a 0.05 chance that it will lose $100. What is the best investment advice in this case?