Introduction to Management Science 12th Edition by Bernard Taylor

Exercise 22

An investment firm is considering two alternative investments, A and B, under two possible future sets of economic conditions, good and poor. There is a.60 probability of good economic conditions occurring and a.40 probability of poor economic conditions occurring. The expected gains and losses under each economic type of conditions are shown in the following table:
Using the expected value of each investment alternative, determine which should be selected.