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Decision Analysis

There are 6 discussion questions about decision analysis. Many of the questions can be answered with a few words such as #1 is "maximin so corporporate bonds," (300 words)

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Discussion Questions:
1. Sue Pansky, a retired grade-school teacher, is considering investing in Starting Right. She is very conservative and is a risk avoider. What do you recommend?
Since Sue is a risk avoider and is very conservative, I would recommend investing in corporate Bonds. The reason is that her investment of $30,000 is secure to the extent of $20,000 as this amount has been guaranteed by Julia. On the other hand she gets a steady income at the rate of 13% per annum
2. Ray Cahn, who is currently a commodities broker, is also considering an investment, although he believes that there is only an 11% chance of success. What do you recommend?
Since, Ray Cahn believes that there is only 11 percent of success, in case of preferred stocks his expected returns is 11% X 4 = 44% plus 50% = 94%. In case of common stocks his expected returns is only 88%. So, Ray Cahn should go in for corporate bonds. This is the choice recommended ...

Solution Summary

This explanation provides you a comprehensive argument relating to Decision Analysis