Paul Hunt is considering two business ventures. The anticipated returns (in thousands of dollars) of each venture are described by the following probability distributions. Venture A Earnings Probability -20 0.4 50 0.3 60 0.3 Venture B Earnings Probability -5 0.3 30 0.3 60 0.4 (a) Compute the mean and variance for Venture A. mean dollars variance dollars2 Compute the mean and variance for Venture mean dollars variance dollars? (b) Which investment would provide Paul with the highest expected return (the greater mean)? O Venture A O Venture B (c) In which investment would the element of risk be less (that is, which probability distribution has the smaller variance)? O Venture A O Venture B

Paul Hunt is considering two business ventures. The anticipated returns (in thousands of dollars) of each venture are described by the following probability distributions. Venture A Earnings Probability -20 0.4 50 0.3 60 0.3 Venture B Earnings Probability -5 0.3 30 0.3 60 0.4 (a) Compute the mean and variance for Venture A. mean dollars variance dollars2 Compute the mean and variance for Venture mean dollars variance dollars? (b) Which investment would provide Paul with the highest expected return (the greater mean)? O Venture A O Venture B (c) In which investment would the element of risk be less (that is, which probability distribution has the smaller variance)? O Venture A O Venture B

College Algebra

10th Edition

ISBN:9781337282291

Author:Ron Larson

Publisher:Ron Larson

Chapter8: Sequences, Series,and Probability

Section8.7: Probability

Problem 11ECP: A manufacturer has determined that a machine averages one faulty unit for every 500 it produces....

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