HumangSubject; As part of their investment strategy, the Carringtons have decided to put $100,000 into stock market investments and also into purchasing precious metals. The performance of the investmentsdepends on the state of the economy in the next year. In an expanding economy, it is expected that their stock market investment will outperform their investment in precious metals, whereas aneconomic recession will have precisely the opposite effect. Suppose the following payoff matrix gives the expected percentage increase or decrease in the value of each investment for each state of theeconomyStock market investmentCommodity investmentExpanding Economiceconomy recession301520(a) Determine the optimal investment strategy for the Carringtons investment of $100,000. (Round your answers to the nearest dollar)stocks$00300$34700commodities(b) What profit can the Carringtons expect to make on their investments over the year if they use their optimal investment strategy? (Round your answer to the nearest dollar),$10600x

(a) Determine the optimal investment strategy for the Carringtone investment of $100,000. (Round your answers to the nearest dollar) $05300 commodities (b) What profit can the Carringtons expect to make on their investments over the year if they use their optimal investment strategy? (Round your answer to the nearest dollar) $1000 x

(a) Determine the optimal investment strategy for the Carringtone investment of $100,000. (Round your answers to the nearest dollar) $05300 commodities (b) What profit can the Carringtons expect to make on their investments over the year if they use their optimal investment strategy? (Round your answer to the nearest dollar) $1000 x

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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