Statistic Forum

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 “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 minus 30%. Likewise for the other possible states of the
economy. Note that the sum of the probabilities has to be 1–and is.

State of economy

Probability

Market Return

Gold Return

Boom

0.15

25%

(-30%)

Moderate Growth

0.35

20%

(-9%)

Week 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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consider the value of a business plan as a resource for sustained company
operations. Watch the video and answer the questions below.

Video:

Learning Objectives:

To examine and review various types of business plans.

To create a potential business plan that could be used for a
new start-up business that could be used in securing financial assistance from
external sources.

Prompt:

How can a business plan assist with keeping a company on a
successful path for continued growth?