Do Homework Abrar Alabdulwahed Internet Explorer 1questionid

Do Homework Abrar Alabdulwahed Internet Explorer 1&questionid; 16&flushedstrue8clda2333; 38cente win mathxl.com Student playerHomework, aspx?ho 266339231 https Abrar Alabdulwahed 3/4/15 7:27 Save ome work: HW 6.1 HW Score: 83.9%, 15.94 of 19 16 of 19 (18 complete) core: 0 of 1 pt la Question Help X 6.1.29 An investment counselor calls with a hot stock tip. He believes that if the economy remains strong, the investment wil result in a profit of $60,000 Ifthe economy grows at a moderate pace, the investment will result in a profit of $20,000. However, if the economy goes into recession, the investment will result in a loss of 300,000 You contact an eoonomist who believes there 30% probability the economy wil remain strong, a 60% probability the economy will grow at a moderate psoe. and a 10% is a probability the economy will slip into recession. What is the expected profit from this investment? The expected profit is s 12000 IType an integer or a decimal) Enter your answer in the answer box, then click Check Answer Check Clear AB All parts showing

Solution

Let Xi represents the profit in state i

and Pi(x) is the probability of attaining state i

expected profit = sum (Xi * Pi(X))

= 60000 * 30% + 20000 * 60% - 60000 * 10%

= $24000   .....ans