In the following date we have 3 investments, all starting with $20000. Investment 1: Put half of the money in a savings account to earn 5% interest and invest the remaining half to have a shot at doubling it with 50% chance or losing it all with 50% chance.

Investment 2: Put $8000 in a savings account to earn 5% interest and invest the remaining $12000 have a shot at earning $8000 return on it with 60% chance or losing $8000 with 40% chance.

Invesment 3: Put all of the money in a savings account to earn 5% interest, there is 1% chance of losing it all.

	5% interest	risky part	Profit	Net profit	utility		EMV	Expected Utility	Certainty Equivalent	Risk Premium
investment 1	500	10000	30500	10500	0.95264108	50%	20,500.00	0.80135166	16162.1917	4,337.81
	500	0	10500	-9500	0.65006225	50%
					0
investment 2	200		28200	8200	0.94039406	60%	21,800.00	0.84614437	18717.40568	3,082.59
	200		12200	-7800	0.70476983	40%
bank account	1000		21000		0.87754357	99%	20,790.00	0.86876814	20307.89566	482.10
			0		0	1%
									amount of money that is equivalent in your mind to a given situation that involves uncertainty	the amount you'll give up to get certainty

Exercise 3 (4 pts) have to write a statement of the environment of the decision and the data that you have, and then solve this statement and explain the conclusions you will reach. The statement should allow to create a 3x3 table with the decisions to be made, the future states and the benefits of each of the decisions in each of the future states. E1 E2 E3 D1 D2 D3 The activities to be carried out with the data are: A. Evaluate the best option with Maximax B. Evaluate the best option with Maximin C. Evaluate the best option with criteria of realism with alpha=0.3 D. Evaluate the best option with equal probability E. Evaluate the best option with Minimax regret F. Create a table with the best option for each technique Exercise 3 (4 pts) have to write a statement of the environment of the decision and the data that you have, and then solve this statement and explain the conclusions you will reach. The statement should allow to create a 3x3 table with the decisions to be made, the future states and the benefits of each of the decisions in each of the future states. E1 E2 E3 D1 D2 D3 The activities to be carried out with the data are: A. Evaluate the best option with Maximax B. Evaluate the best option with Maximin C. Evaluate the best option with criteria of realism with alpha=0.3 D. Evaluate the best option with equal probability E. Evaluate the best option with Minimax regret F. Create a table with the best option for each technique