2\"\" till If; QUESTION An investor is considering Investing in the bonds of Uhurtrpic. Prevailing Interest rate environment inuences investors decision to invest or not It has been predicted that Interest rates will either be declining or remain stable tor the foreseeable future The probability that interest rates will be declining is 0.55 \ rhereas the probability that they will remain stable is 0.45. In a declining interest rates environment. the probability that the investor will invest it Uhuru's bond price is above R100 Is 0.35 whereas the probability of investing II price is lower than R100 Is 0.65. In a stable interest rate environment. the probability that the investor will invest it Uhttru's bond price is R120 is 0.40 whereas the probability of investing is (160 if bond price Is lower. Based on the information provided do the following: a) Draw a tree diagram for the problem. b) Compute the probability that the investor will invest In the shares ii' bond price ls above R100 in a declining imerest rate environment c] Compute the probability that the Investor wiil invest it bond price is below R100 in a declining interest rate environment. d) Calculate the probability that the investor will invest In the bond If price is R120 in a stable Interest rate environment. e} Calculate the probability that the investor will invest in the bond if price is lower than R120. Export to PDF Picture Sharing File Compressor CI (2. 1 .9. Mobile Wew Share Edit on PC School Tools '5 O