Hi,

I have a question, as presented in the attachment.

Moreover, I would like to ask why people would gamble in the two last cases if my answer is correct? If I'm not mistaken, then even though the return is guaranteed, we would lose a greater amount of money in either case. This particular chapter is really confusing for me, so please, if you can, answer in as much detail as you can.

Thank you. I really appreciate your help.

Lu Lab7lnc'stiun4}wiylnymmilglmrPnsnnairMiquftkig , x lit httpszaeccnl .iyryxcom/studemrservletS/LabServletkcid = 3820 Q Print Freterences Help Lab 7 (Question 4) Name, Ha Tuan Khanh Nguyen Date: 2021-03-13 Question 4 [5 points] You have $1000 to invest and are considering buying some combination of the shares of two companies. Donkeylnc and Bearlnc. Shares of Donkeylnc will pay a 5 percent return if the Conservatives are elected, an event you believe to have a 20 percent probability; othenNise the shares pay a zero return. Shares of Bearlnc will pay 10 percent if the Liberals are elected (a 80 percent probability). zero otherwise. Either the Liberals or the Conservatives will be elected. Note: Keep as much precision as possible during your calculations. Your final answer should be accurate to at least two decimal places. a) If your only concern is maximizing your average expected return, with no regard for risk, how should you invest your $1000? b) Devise an investment strategy that guarantees at least a 3.25 percent return, no matter which party wins the election. c) Devise an investment strategy that is riskless, that is, one in which the return on your $1000 does not depend at all on which party wins. Ofcial Time: 16:47:50 alaanoeeggg moowwm-ms :: P Type hereto Search 0 er