A venture capitalist, willing to invest $1,000,000, has three investments to choose from. The first investment, a software company, has a 14% chance of returning $9,000,000 profit, a 31% chance of returning $1,000,000 profit, and a 55% chance of losing the million dollars. The second company, a hardware company, has a 15% chance of returning $9,000,000 profit, a 18% chance of returning $3,000,000 profit, and a 67% chance of losing the million dollars. The third company, a biotech firm, has a 6% chance of returning $10,000,000 profit, a 20% of no profit or loss, and a 74% chance of losing the million dollars.
Order the expected values from smallest to largest.
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Step-by-step explanation:
Step 1 of 5
a.
According to the provided information of the problem, the probability distribution function can be constructed for each investment, which is given as below:
For software company:
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