Nicole Nelson has come into an inheritance from hergrandparents. She is attempting to decide among several investment alternatives.

Nicole Nelson has come into an inheritance from hergrandparents. She is attempting to decide among several
investment alternatives. The return after one year is dependent primarily on the interest rate during the next year. Therate is currently 7%, and she anticipates it will stay thesame or go up or down by at most 2 points. The variousinvestment alternatives plus their returns ($10,000s) giventhe interest rate changes are shown in the following table Interest RatesInvestments 5% 6% 7% 8% 9%
Money market fund 1.7 2.8 3.0 3.6 4.5
Stock growth fund 5 3 3.5 5 7.5
Bond fund 5 4 3.5 3 2
Government fund 4 3.6 3.2 2.8 2.1
Risk fund 12 7 4.2 9.3 16.7
Savings bonds 3 3 3.2 3.4 3.5
Determine the best investment using the following decisioncriteria.
a. Maximax
b. Maximin
c. Equal likelihood
d. Assume that Nicole, with the help of a financialnewsletter and some library research, has been able to
assign probabilities to each of the possible interest ratesduring the next year as follows:Interest Rate 5% 6% 7% 8% 9%Probability 0.1 0.2 0.4 0.2 0.1
Using expected value, determine her best investment decision.

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