J L QUESTION An investor is considering investing in the bonds of Uhuru pic. Prevailing interest rate environment influences investors' decision to invest or not. It has been predicted that interest rates will either be declining or remain stable for the foreseeable future. The probability that interest rates will be declining is 0.55 whereas the probability that they will remain stable is 0.45. In a declining interest rates environment, the probability that the investor will invest if Uhuru's bond price is above R100 is 0.35 whereas the probability of investing if price is lower than R100 is 0.65. In a stable interest rate environment, the probability that the investor will invest if Uhuru's bond price is R120 is 0.40 whereas the probability of investing is 0.60 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 if bond price is above R100 in a declining interest rate environment. o) Compute the probability that the investor will invest if 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. Word Count: 1364 Share Export to PDF Picture Sharing File Compressor DD no l:l C); El :8: Tools Mobile View Share Edit on PC School Tools 0 <