Starting Right - Case

The Starting Right case represents a business scenario requiring you to analyze investment options to determine thebestoption for raising funds. Given the information provided for each of the investment opportunities, Corporate Bonds, Preferred Stock, or Common Stock, calculate the expected payoffs. You are told that you need to consider 2 environments (states of nature), a favorable market or an unfavorable market. Since you do not the probabilities of the various outcomes, you need to consider the criteria for decision making under uncertainty (section 3.4).

The steps for analyzing the case are as follows:

1)State all of your assumptions (return rates, investment amounts, etc.).

2)Build a decision table containing the payoffs for each of your alternatives and your environments

3)For each question in the case, select the appropriate criteria and determine your best option.

4)For each response, state yourcriteria, thepayoff(the amount you stand to grain/loose), and a brief statement defending your recommendation.