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Connderigabaet S-IL-225 do2 2,-MR4Rtrn 253L 2541 SCGujta Q. No. |9. Investment staff abank is considering four investments proposals for a client being shares, bonds, realestate and saving certificates, These investrments will be for one year. The past data regarding the four propgsals are given below: [AJShares: There is/hance that shares will decline by 10%, 30% chance that it will remain stable and 45% chance that their value will increase by 15%. Shares under consideration do not pay any dividend. [B] Bonds: There is 40% chance to increase its, value by5%( of face value)and 60% chances of remaining stable they will yield 12%. (C] Real Estate: This proposal has a 20% chance of increasing 30% in value, 25% chance of increasing 20% in value, 40% chance of increasing 10% in value, 10% chances of remaining stable and 5% chance of losing 5% of its value. (D]Savings Certificate: This certificate yields 8.5% with certainty. Using expected monetary value (EMV) criterion chooses the alternative with the highest expected value.
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