Question: 3.1 Solve the below problem Let Y, Y2, and Yz be random variables, where E(Y1) = 1, E(Y2) = 2, E(Y3) = -1, V(Y1) =

3.1 Solve the below problem Let Y, Y2, and Yz be

3.1 Solve the below problem Let Y, Y2, and Yz be random variables, where E(Y1) = 1, E(Y2) = 2, E(Y3) = -1, V(Y1) = 1, V(Y2) = 3,V(Y3) = 5, Cov (Y1, Y2) = -0.4, Cov(Y1, Y3) = 1/2, and Cov(Y2, Y3) = 2. Find the expected value and variance of U = 2Y, - 2Y 2 + 2Y3. (2.5+2.5)

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2. Find out if there are other reference points that can be used as reasonable alternatives.

1. Identify your reference point when making a decision based on an element of risk.

3. If there are reasonable alternatives, think about your decisions based on the different reference points and see if there are any contradictions in the decisions.