Apply the maximin criterion assuming that the worst outcome in Business

An angel investor is considering investing in one of two start-up businesses and is evaluating t Show more . An angel investor is considering investing in one of two start-up businesses and is evaluating the expected returns along with the risk of each option in order to choose the better alternative. Business 1 is an innovative protein energy drink which has ENPV of $100000 with a standard deviation of $40000. Business 2 is a unique chicken wings dipping sauce with an ENPV of $60000 and a standard deviation of $25000. a) Apply the coefficient-of-variation decision criterion to these alternatives to find out which is preferred by the angel investor assuming that he/she is risk-averse. b) Apply the maximin criterion assuming that the worst outcome in Business 1 is to lose $5000 whereas the worst outcome in Business 2 is to make only $5000 in profit. c) If you were the angel investor what is your certainty equivalent for these two projects? Are you risk-averse risk-neutral or risk-lover? Show less


 

. .

get-your-custom-paper

The post Apply the maximin criterion assuming that the worst outcome in Business appeared first on Brainy Term Papers.

Source link

The post Apply the maximin criterion assuming that the worst outcome in Business first appeared on Term Paper Tutors.

 

"Is this question part of your assignment? We Can Help!"

Essay Writing Service