a) A Clothing store is considering expanding its capacity to meet the growing demand for its products. The alternatives are to build a new store at a site nearby, expand the old one, or do nothing. Here are the regional economic outlooks: a 65% chance that the economy will remain unchanged, a 25% probability of an upturn, and a 10% chance of an economic downturn. The following estimates of annual returns have been provided: Market upturn (millions) Stable market (millions) Market downturn (millions) -0.36 0.4 1.8 Build new store -0.15 1.6 0.6 Expand old store -0.35 0.1 Do nothing 0.6 Assume the goal is to maximize expected profit. 1 What should the company do? (11.5 MARKS) Il What is the expected profit under the optimal decision? (1 MARK) b) Why is the regulation of insurance companies necessary? (1 MARK) What is the FSC(Ja), and what is its role in the Jamaican insurance industry? (6 MARKS) c) What does it mean to be risk averse? (1.5 MARKS)