6) An investor is considering a $25,000 investment in a start-up company. She estimates that she...
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6) An investor is considering a $25,000 investment in a start-up company. She estimates that she has a probability of 0.45 of a $60,000 loss, probability of 0.25 of a $40,000 profit, probability of 0.20 of a $15,000 profit, and probability 0.10 of breaking even (a profit of $0). a) Create a discrete probability distribution. b) What is the expected value of the investment? c) Would you advise the investor to make the investment? Explain why? 6) An investor is considering a $25,000 investment in a start-up company. She estimates that she has a probability of 0.45 of a $60,000 loss, probability of 0.25 of a $40,000 profit, probability of 0.20 of a $15,000 profit, and probability 0.10 of breaking even (a profit of $0). a) Create a discrete probability distribution. b) What is the expected value of the investment? c) Would you advise the investor to make the investment? Explain why?
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