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Recently, you have been considering investing your money to increase your earnings. There are 3 investment plans for you to consider. Each plan calls for
Recently, you have been considering investing your money to increase your earnings. There are investment plans for you to consider. Each plan calls for an investment of $ and the return will be one year later. Plan A will return $ Plan B will return $ or $ with probabilities and respectively. Plan C will return $ $ or $ with probabilities and respectively.
a If the random variables denote the returns from investment plans and respectively, what are the mean and variance of the three random variables?
b Which plan would you choose if your objective is to maximize your expected return, and you also do not want to lose money? Provide justification for your choice.
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