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Topic: Mean and Variance of Discrete Random Variable and the Characteristics of Normal Random Variable Example 1: Suppose that you are given the option of two investment portfolios, A and B, with potential profits and the associated probabilities displayed below. PORT Profit ORTFOLIO B Probablity P(x) 0.3 0.1 0.3 0.3 Profit Probability -2,000 4,000 3,000 5,000 Calculated Mean and Standard Deviation for Portfolio A: Calculated Mean and Standard Deviation for Portfolo B: P(x) 0.2 0.2 0.4 0.2 -3,000 -2,000 4,000 5,000 p-1,400 and o = 3,322.65 1,600 and o = 3,882.31 A Using the mean and variance of Portfollo A, interpret the result.2022/378 15:05 B. Based on the expected profits, which portfolio will you choose?

Topic: Mean and Variance of Discrete Random Variable and the Characteristics of Normal Random Variable Example 1: Suppose that you are given the option of two investment portfolios, A and B, with potential profits and the associated probabilities displayed below. PORT Profit ORTFOLIO B Probablity P(x) 0.3 0.1 0.3 0.3 Profit Probability -2,000 4,000 3,000 5,000 Calculated Mean and Standard Deviation for Portfolio A: Calculated Mean and Standard Deviation for Portfolo B: P(x) 0.2 0.2 0.4 0.2 -3,000 -2,000 4,000 5,000 p-1,400 and o = 3,322.65 1,600 and o = 3,882.31 A Using the mean and variance of Portfollo A, interpret the result.2022/378 15:05 B. Based on the expected profits, which portfolio will you choose?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Mean and Variance of Discrete Random Variable and the Characteristics of Normal Random Variable Example 1: Suppose that you are given the option of two investment portfolios, A and B, with potential profits and the associated probabilities displayed below. PORTFOLIO A Profit X -2,000 -4,000 3,000 5,000 PROBABILITY P(x) 0.3 0.1 0.3 0.3 PORTFOLIO B Profit X -3,000 -2,000 4,000 5,000 Probability P(X) 0.2 0.2 0.4 0.2 Calculated Mean and Standard Deviation for Portrollo A: Mean = 1,400 and standard deviation = 3,322.65 Calculated Mean and Standard Deviation for Portrollo B: Mean=1,600 and standard deviation= 3,882.31 A. using the mean and variance of portfolio A, interpret the result B.Based on the expected profits, which portfolio will you choose?
Topic: Mean and Variance of Discrete Random Variable and the Characteristics of Normal Random Variable Example 1: Suppose that you are given the option of two investment portfolios, A and B, with potential profits and the associated probabilities displayed below. PORTPOLIO Profit Probablity P(x) 0.3 0.1 0.3 0.3 Calculated Mean and Standard Deviation for Portfolio A: p= 1,400 and 6 = 3,322.65 ORTFOLIO Probablity P(X) 0.2 0.2 0.4 Profit -2,000 4,000 3,000 5,000 -3,000 -2,000 4,000 5,000 0.2 !3! %3D Calculated Mean and Standard Deviation for Portfollo B: A. Using the mean and variance of Portfolo A, interpret the result.20227378 15:05 p= 1,600 and 8= 3.882.31 %3! B. Based on the expected profits, which portfolio will you choose?
Transcribed Image Text:Topic: Mean and Variance of Discrete Random Variable and the Characteristics of Normal Random Variable Example 1: Suppose that you are given the option of two investment portfolios, A and B, with potential profits and the associated probabilities displayed below. PORTPOLIO Profit Probablity P(x) 0.3 0.1 0.3 0.3 Calculated Mean and Standard Deviation for Portfolio A: p= 1,400 and 6 = 3,322.65 ORTFOLIO Probablity P(X) 0.2 0.2 0.4 Profit -2,000 4,000 3,000 5,000 -3,000 -2,000 4,000 5,000 0.2 !3! %3D Calculated Mean and Standard Deviation for Portfollo B: A. Using the mean and variance of Portfolo A, interpret the result.20227378 15:05 p= 1,600 and 8= 3.882.31 %3! B. Based on the expected profits, which portfolio will you choose?
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