Ann Tyler has come into an inheritance from her grandparents. She is attempting to decide among several investment alternatives. The return after 1 year is primarily dependent on the interest rate during the next year. The rate is currently 7%, and Ann anticipates that it will stay the same or go up or down by at most two points. The various investment alternatives plus their returns ($10,000s), given the interest rate changes, are shown in the following table:

Determine the best investment, using the following decision criteria.
a. Maximax
b. Maximin
c. Equallikelihood

  • CreatedJuly 17, 2014
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