An investor is considering purchasing one of three stocks. Stock A is regarded as conservative, stock B

Question:

An investor is considering purchasing one of three Stock A is regarded as conservative, stock B as speculative, and stock C as highly risky. If the economic growth during the coming year is strong, then stock A should increase in value by $3000, stock B by $6000, and stock C by $15,000. If the economic growth during the next year is average, then stock A should increase in value by $2000, stock B by $2000, and stock C by $1000. If the economic growth is weak, then stock A should increase in value by $1000 and B and C decrease in value by $3000 and $10,000, respectively.
(a) Set up the 3 × 3 payoff matrix showing the investing gains for the possible stock purchases and levels of economic growth.
(b) What is the investor's optimal strategy?
Stocks
Stocks or shares are generally equity instruments that provide the largest source of raising funds in any public or private listed company's. The instruments are issued on a stock exchange from where a large number of general public who are willing...