An investor is considering investing Rs. 15,000 in wheat futures and believes that there is a
0.10 probability that he will lose Rs. 5,000 by the expiration of the contract; a 0.20 probability
that he will make Rs. 2,000, a 0.25 probability that he will make Rs. 3,000; a 0.15 probability
that he will make Rs. Rs. 4,000; a 0.15 probability that he will make Rs. 5,000; a 0.10 probability
that he will make Rs. 6,000; and a 0.05 probability that he will make Rs. 7,000. If the investor
should find out that he is going to lose Rs. 5,000, he can pull out of his contract, losing Rs. 3,500
for certain and an additional Rs. 3,000 with probability 0.20 (the latter amount deposited with a
brokerage firm as a guarantee).
Suppose the investor is also considering another investment option as an alternative to wheat
futures. He is considering investing Rs. 15,000 in a limited partnership for the same duration of
time as the future contract. This alternative has a 0.50 chance of earning Rs. 5,000 and a 0.50
chance of earning nothing.
Draw the decision tree for this problem and suggest what the investor should do.
Answers
Answer:
standard deviation of 11 years. If a random sample of 36 people are taken from the
population of 1000 people. On the basis of this information can you claim that the sample
mean will be greater than 42. If yes then test your claim at 5% level of Significance.
(Table Value of 0.05 -0.1335)
OR
standard deviation of 11 years. If a random sample of 36 people are taken from the
standard deviation of 11 years. If a random sample of 36 people are taken from thepopulation of 1000 people. On the basis of this information can you claim that the sample
standard deviation of 11 years. If a random sample of 36 people are taken from thepopulation of 1000 people. On the basis of this information can you claim that the samplemean will be greater than 42. If yes then test your claim at 5% level of Significance.
(Table Value of 0.05 -0.1335)
ORstandard deviation of 11 years. If a random sample of 36 people are taken from the
population of 1000 people. On the basis of this information can you claim that the sample
mean will be greater than 42. If yes then test your claim at 5% level of Significance.
(Table Value of 0.05 -0.1335)
OR