Suppose you are considering the purchase of a certain stock on the New York Stock Exchange, tomorrow. You will take either action a t : buy thc stock tomorrow, or action aZ:n ot to buy the stock tomorrow. For these two actions, you have the following loss function:

L(a,, 0) = 500 + 0.20, L(a,, 0) = 300 + 0.40.

Assume there: are no data available, but your prior distribution for I) is N

(I 100, 2500). As a Bayesian, should you buy the stock?

Suppose you wish to estimate -the mean of the distribution N(B. lo), and you have a loss function L(0.U) = 5(0 - Of. You take a sample of data and find X = 17. Your prior belief is that 6’ - N(6, 11). Find a Bayesian estimate of 0.