Question

A man has to decide how to invest the money for one year. A broker has suggested five potential investments: Bonds, Stocks, or deposits. The return on each investment depends on the market behavior during the year. It might have Growth, Medium Growth, No Change, or Decline (i.e. Low). He then builds a payoff table to help make the investment decision.




States of Nature





Growth

Medium Grouth

No Change

Low



Bonds

12

8

7

3

Actions

Stocks

15

9

5

-2



Deposit

7

7

7

7

The problem is to decide what action to take among three possible courses of action with the given rates of return as shown in the body of the table using

Maximin
Hurwicz's Index
Maximax
Minimax Regret Criterion

Answer 1

Answer:

muddy cheddy rackle edit open