TutorTeddy.com, Tutoring, Dallas, TX
Welcome to TutorTeddy.com


Statistics Help




Ask any Statistics/Probability/Math or Any homework Question




Question: An investor is considering 4 different opportunities, A, B, C, or D. The payoff for each opportunity will depend on the economic conditions, represented in the payoff table below.

Economic Condition
Poor Average Good Excellent
Investment (S1) (S2) (S3) (S4)
A 50 75 20 30
B 80 15 40 50
C -100 300 -50 10
D 25 25 25 25

If the probabilities of each economic condition are 0.5, 0.1, 0.35, and 0.05 respectively, what is the highest expected payoff?
  Edit

Answer: Expected payoff for A= 50*0.5 + 75*0.1+20*0.35+0.05*30 = 41

Expected payoff for B = 80*0.5+15*0.1+40*0.35+50*0.05= 58

Expected payoff for C = -100*0.5+300*0.1-50*0.35+10*0.05=-37

Expected payoff for D = 25*0.5+25*0.1+25*0.35+25*0.05=25

the highest expected payoff = 58  Edit

TutorTeddy.com & Boston Predictive Analytics

[ Email your Statistics or Math problems to tutor@aafter.com (camera phone photos are OK) ]


Boston Office (Near MIT/Kendall 'T'):
Cambridge Innovation Center,
One Broadway, 14th Floor,
Cambridge, MA 02142,
Phone: 617-395-8864


Dallas Office (Near Galleria):
15950 Dallas Parkway,
Suite 400,
Dallas, TX 75248,
Phone: 866-930-6363

Copyright 2011 tutorteddy.com. All Rights Reserved. | By using our site, you agree to our TOS.