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gora2005
gora2005
05.05.2020 • 
Mathematics

(8 points) An investor is considering a $10,000 investment in a start-up company. She estimates that she has a 0.25 probability of a $20,000 loss, a 0.20 probability of $10,000 profit, a .15 probability of a $50,000 profit, and a 0.40 probability of breaking even (a profit of $0). (a) Make a probability distribution for this investment. (b) Compute the expected value for this investment. (show work!) (c) What does the expected value tell us in terms of this investment? (d) What is the probability that you will make money on this investment?

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