Mickey Lawson is considering investing some money that he inherited. The following payoff table gives the profits that would be realized during the next year for each of three investment alternatives Mickey is considering:
DECISION ALTERNATIVE GOOD ECONOMY POOR ECONOMY
Stock ma rket 80,000 -20,000
Bonds 30,000 20,000
CD’s   ; 23,000 23,000
Probability & nbsp; 0.5 0.5
What decision would maximize expected profits?
What is the maximum amount that should be paid for a perfect forecast of the economy?
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