3) Michey Lawson is considering investing some money that he inherited. The following payoff table gives the profits tha

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3 Michey Lawson Is Considering Investing Some Money That He Inherited The Following Payoff Table Gives The Profits Tha 1 (34.49 KiB) Viewed 81 times

3) Michey Lawson is considering investing some money that he inherited. The following payoff table gives the profits that would be realized during the next year for each of the three investment alternatives Mickey is considering: DECISION ALTERNATIVE Stock market Bonds CDs Probability STATE OF NATURE GOOD POOR ECONOMY ECONOMY 75,000 -10,000 35,000 30,000 45,000 20,000 0.4 0.6 Show complete work in your answers to parts a-e: a) What kind of decision-making environment is this? (5 pts) b) What decision would maximize expected profits? (10 pts) c) What is the maximum amount that should be paid for a perfect forecast of the economy? (10 pts) d) Develop an opportunity loss table. (10 pts) e) What decision would minimize the expected opportunity loss? (10 pts)