An investor is considering a $30,000 investment in a start-up company. She estimates that she has a probability of 0.30 of a $20,000 loss, probability of 0.20 of a $35,000 profit, probability of 0.35 of a $45,000 profit, and probability 0.15 of breaking even (a profit of $0). What is the expected value of the profit? Would you advise the investor to make the investment? Explain why?
Contingency Table
A contingency table can be defined as the visual representation of the relationship between two or more categorical variables that can be evaluated and registered. It is a categorical version of the scatterplot, which is used to investigate the linear relationship between two variables. A contingency table is indeed a type of frequency distribution table that displays two variables at the same time.
Binomial Distribution
Binomial is an algebraic expression of the sum or the difference of two terms. Before knowing about binomial distribution, we must know about the binomial theorem.
An investor is considering a $30,000 investment in a start-up company. She estimates that she has
a
$45,000 profit, and probability 0.15 of breaking even (a profit of $0). What is the
profit? Would you advise the investor to make the investment? Explain why?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
