Question: please help me answer these three questions and how did you answer them Let us suppose you can put your money into a savings account
Let us suppose you can put your money into a savings account and earn $500 in two years. Alternatively, you could put your money into a risky investment or into a more conservative investment. For the risky investment if the economy is good, will profit you $2000, but during a bad year, you would lose $500. For the conservative investment if the economy is good, will profit you $1000, but if the economy is bad, you will lose $300. Assume that the probability of a good year is 36%. What is the ex value of the risky investment? QUESTION 2 Let us suppose you can put your money into a savings account and earn $500 in two years. Alternatively, you could put your money into a risky investment or into a more conservative investment. For the risky investment if the economy is good, will profit you $2000, but during a bad year, you would lose $500. For the conservative investment if the economy is good, will profit you $43, but if the economy is bad, you will lose $71. Assume that the probability of a good year is 29.8%. What is the expected value of the conversative investment? QUESTION 3 Let us suppose you can put your money into a savings account and earn $256 in two years. Alternatively, you could put your money into a risky investment or into a more conservative investment. For the risky investment if the economy is good, will profit you $2000, but during a bad year, you would lose $500. For the conservative investment if the economy is good, will profit you $962, but if the economy is bad, you will lose $271. Assume that the probability of a good year is 54.1%. What is the expected value of the savings account
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