Ray Crofford Is Evaluating Investment Alternatives for the $100,000 Which $\quad$

question 51

Multiple Choice

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following table which shows expected profits (in $10,000's) for various market conditions and their probabilities. $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$$\quad$$\text { Market Condition }$
$\begin{array}{|c|c|c|c|}\hline \text { Investment } & \text { Bull(.5) } & \text { Neutral(.3) } & \text { Bear(.2) } \\\hline \text { T-Bills } & 3 & 3 & 3 \\\hline \text { Stocks } & 21 & 11 & -30 \\\hline \text { Bonds } & 15 & 4 & -3 \\\hline \text { Mixture } & 13 & 6 & -10 \\\hline\end{array}$

The expected value of perfect information is ________.

• A)$57,000
• B)$63,000
• C)$79,000
• D)$82,000
• E)$87,000

---

Definitions:

Personality

A blend of traits or attributes that create a unique personality for a person.

Arguments

Involves presenting reasons or evidence to support or oppose an idea, action, or theory. It is a fundamental aspect of critical thinking and discourse.

Merit

The quality of being particularly good or worthy, especially so as to deserve praise or reward.

Cerebral Asymmetry

The uneven distribution and specialization of functions in the two hemispheres of the brain.