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Question 5) Ellie Daniels has $200,000 and is considering one of three mutual funds for investment:...

Question 5) Ellie Daniels has $200,000 and is considering one of three mutual funds for investment: A global fund, an index fund and an internet fund. Based on previous returns, the following table represents the outcomes based on Good or Mediocre market conditions:

Market

Conditions

Fund

Good

Mediocre

Global

$25,000

-$8000

Index

$35,000

$5000

Internet

$60,000

-$35000

Which fund should she choose using each of the following decision methods

  1. Maximax

  1. Maximin

  1. Hurwicz with α = .55

  1. Expected value method if there is a .7 chance of “Good” conditions and .3 chance of “Mediocre” conditions.

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Expert Solution

keosha answered 2 months ago
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