Question
Suppose a small business investor has a certain amount of money available to invest now. Four alternative investments are available. Th estimated profits of each
Suppose a small business investor has a certain amount of money available to invest now. Four alternative investments are available. Th estimated profits of each investment under each economic condition are indicated in the following table.
Alternatives | States of Nature | |||
S1 | S2 | S3 | S4 | |
A1 | $170 | $45 | -$60 | $100 |
A2 | $30 | $190 | $175 | -$65 |
A3 | $145 | -$50 | $120 | $110 |
A4 | -$40 | $80 | $10 | $70 |
Suppose that the small business investor assigns prior probabilities of 0.10 to S1, 0.20 to S2, 0.30 to S3 and 0.40 to S4.
Based on the above information, what is the expected monetary value (EMV) for alternative A2? Note: don't insert the dollar sign ($) when answering the question.
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