We need to choose best among the three available investment alternatives high-risk stock, low-risk stock and savings account. Fixed payoff 500€ for savings account for the deposited amount. 200€ fixed fee needs to be paid towards trading charges. Payoffs details depends on marke conditions as mentioned below. Which investment option you will choose and why? If you need any more details to solve this problem, please make your assumptions and list all the assumptions that you made. Market Up Market Same Market Down High Risk 1700 300 -800 Low Risk 1200 400 100 Probability 0.5 0.3 0.2

Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter2: Introduction To Spreadsheet Modeling
Section: Chapter Questions
Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...
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We need to choose best among the three available investment alternatives high-risk stock, low-risk stock and savings account. Fixed payoff o:
500€ for savings account for the deposited amount. 200€ fixed fee needs to be paid towards trading charges. Payoffs details depends on market
conditions as mentioned below. Which investment option you will choose and why?
If you need any more details to solve this problem, please make your assumptions and list all the assumptions that you made.
Market Up Market Same Market Down
High Risk
1700
300
-800
Low Risk
1200
400
100
Probability
0.5
0.3
0.2
Transcribed Image Text:We need to choose best among the three available investment alternatives high-risk stock, low-risk stock and savings account. Fixed payoff o: 500€ for savings account for the deposited amount. 200€ fixed fee needs to be paid towards trading charges. Payoffs details depends on market conditions as mentioned below. Which investment option you will choose and why? If you need any more details to solve this problem, please make your assumptions and list all the assumptions that you made. Market Up Market Same Market Down High Risk 1700 300 -800 Low Risk 1200 400 100 Probability 0.5 0.3 0.2
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