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# #) Marks) Fred is building his stock portfolio. He's trying to determine which investment to add to his portfolio. Each investment has a wide

## #) Marks) Fred is building his stock portfolio. He's trying to determine which investment to add to his portfolio. Each investment has a wide range of potential outcomes that Fred has estimated. Both investments require the same initial investment. At year-end, Fred will sell the investment. Under some situations, his investment went up (while in other potential scenarios it may go down). Therefore, some scenarios will have a net cash outflow. Technocrat Inc After-Tax Inflow Probability (Outflow) $10,000 10% -$20,000 30% $50,000 30% $75,000 20% $90,000 10% Rock Ltd After-Tax Inflow (Outflow) Probability $15,000 20% $25,000 30% $35,000 40% $45,000 10% a) Determine the expected value for each investment. b) Determine the coefficient of variation for each investment. c) If Fred is risk averse, which investment is best for him? If Fred is neutral to the concept of risk, what investment is best for him?

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Certainlylets analyze the investment options for Fred a Expected Value The expected value EV represents the average return you can anticipate from an investmentIts calculated by multiplying each possi...### Get Instant Access to Expert-Tailored Solutions

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