Business, 17.08.2019 19:20 jasminespets

Suppose that the percentage annual return you obtain when you invest a dollar in gold or the stock market is dependent on the general state of the national economy as indicated below. for example, the probability that the economy will be in a 'boom' state is 0.15. in this case, if you invest in the stock market, your return is assumed to be 25%; on the other hand, if you invest in gold when the economy is in a 'boom' state, your return will be -30%. likewise for the other possible states of the economy. note that the sum of the probabilities has to equal 1.state of economy probability market return gold returnboom 0.15 25% (-30%)moderate growth 0.35 20% (-9%)weak growth 0.25 5% 35%no growth 0.25 (-14%) 50%based on the expected return, would you rather invest your money in the stock market or in gold? why?

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