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statistics probability tree question An investor is considering how to invest her money. She has two options either a domestic mutual fund that only invests
statistics probability tree question
An investor is considering how to invest her money. She has two options either a domestic mutual fund that only invests in the Energy sector or an international aggressive mutual fund that invests in promising startups in the Food, Beverage & Tobacco sector. The payoff (profit) after one year for these investments depends on the state of economy. The investor thinks that there is 0.4 probability that economy will improve and 0.6 probability that economy will decline. The estimated payoffs are shown in the table below. Domestic 3 600 Mutual Fund ' International 1 800 Mutual Fund ' Construct a decision tree for this problem. State of the Economy Economy improves Economy Declines (0.40) (0.60) Domestic MF International MF (a) Fill in the probability tree values: probability 1: probability 2: probability 3: probability 4: Round your answers in part (b) to the nearest dollarStep by Step Solution
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