Question

Ryu Matsuya is looking for two investors to raise capital for a new venture company. Alston Capital is interested and so is Brennan Associates. He believes it is 80% likely that Alston will invest, and if Alston invests, it’s 90% likely that Brennan will also invest. However, if Alston doesn’t invest, the chances that Brennan will invest are only 1-in-5 (20%). Use a probability tree to determine the probability that
a. Only Brennan invests.
b. No more than one of the firms invests.
c. Both invest.


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  • CreatedJuly 16, 2015
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