Question 1 - Investment Outcomes

Alan and his financial advisor Bob discuss risk measurement for investment options. Bob presents an investment with the possible outcomes and their associated probabilities given in the table below. He indicates that these probabilities are calculated based on past experience, industry rations and trends, and sophisticated simulation techniques.

Table 1 Probability Distribution of Outcomes for an Investment Outcome Probability of Outcome Assumptions $300 20% Pessimistic $600 60% Moderately successful\f\f