Question

Returns on a certain business venture, to the nearest $1,000, are known to follow the following probability distribution
X P(x)
-2,000 0.1
-1,000 0.1
0 0.2
1000 0.2
2000 0.3
3000 0.1




(i) What is the most likely monetary outcome of the business venture?
(ii) Is the venture likely to be successful? Explain
(iii) What is the long-term average earning of business ventures of this kind? Explain
(iv) What is the good measure of the risk involved in a venture of this kind? Compute this measure

Answer 1

Answer:

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