the economic probabilities pj in assumptions
5-6 You are considering three investment alternatives for some spare cash: Old Reliable
Corporation stock (A1), Fly-By-Nite Air Cargo Company stock (A2), and a federally insured
savings certificate (A3). You expect the economy will either “boom” (N1) or “bust” (N2), and
you estimate that a boom is more likely (p1 = 0.6) than a bust (p2 = 0.4). Outcomes for
the three alternatives are expected to be (1) $2,000 in boom or $500 in bust for Old Reliable
Corporation; (2) $6,000 in boom, but –$5,000 (loss) in bust for Fly-By-Nite; and (3) $1,200
THE QUESTION IS
5.7 If you have no idea of the economic probabilities pj in Question 5-6, what would be your
decision based on uncertainty using (a) maximax, (b) maximin, (c) equally likely, and (d)
minimax regret assumptions? DO THIS QUESTION IN EXCEL FILE and if there are some calculations please show me your math when I click on the cells