Every month Jorge invests a quantity of money in shares in the stock market. With a probability
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Question:
Every month Jorge invests a quantity of money in shares in the stock market. With a probability of 1/3, Jorge makes a mistake in the investment and makes a profit between -10 and 1 million pesos (negative values represent losses). On the other hand, with a 2/3 probability, Jorge earns between 1 and 8 million. All intervals of gain (or loss) are evenly distributed.
a) Define the density function fX (x)
b) What is the probability that Jorge does not lose money?
c) What is Jorge's expected profit?
Related Book For
Essentials of Corporate Finance
ISBN: 978-0078034756
8th edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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