An investor is considering two different mutual funds: Allegiance 2030 and the Global Growth. The yearly profits of the mutual funds are dependent upon how the market reacts each year. Recently the market has been oscillating around the 14,000 mark from one year end to the next, according to the probabilities given in the following transition matrix: 13.000 14,000 15.000 13,000 0.20 0.25 0.20 14,000 0.40 0.50 0.40 15,000 0.40 0.25 0.40 Each year that the market moves up (down) 1,000 points, the Allegiance 2030 has profits (losses) of $20,000, while the Global Growth fund has profits (losses) of $10,000. If the market moves up (down) 2,000 points in a year, the Allegiance 2030 fund has profits (losses) of $50,000, while the Global Growth fund has profits (losses) of only $25,000. If the market does not change, there is no profit or loss for either fund. a) Suppose that the market closes the year at 13,000. What is the expected profit of the Allegiance 2030 fund for the next year? b) Suppose that the market closes the year at 14,000. What is the expected profit of the Global Growth fund for the next year? c) Which investment would you recommend in order to maximize (long-run) expected average profit per year assuming that the investor will keep his or her money in the same fund? An investor is considering two different mutual funds: Allegiance 2030 and the Global Growth. The yearly profits of the mutual funds are dependent upon how the market reacts each year. Recently the market has been oscillating around the 14,000 mark from one year end to the next, according to the probabilities given in the following transition matrix: 13.000 14,000 15.000 13,000 0.20 0.25 0.20 14,000 0.40 0.50 0.40 15,000 0.40 0.25 0.40 Each year that the market moves up (down) 1,000 points, the Allegiance 2030 has profits (losses) of $20,000, while the Global Growth fund has profits (losses) of $10,000. If the market moves up (down) 2,000 points in a year, the Allegiance 2030 fund has profits (losses) of $50,000, while the Global Growth fund has profits (losses) of only $25,000. If the market does not change, there is no profit or loss for either fund. a) Suppose that the market closes the year at 13,000. What is the expected profit of the Allegiance 2030 fund for the next year? b) Suppose that the market closes the year at 14,000. What is the expected profit of the Global Growth fund for the next year? c) Which investment would you recommend in order to maximize (long-run) expected average profit per year assuming that the investor will keep his or her money in the same fund