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# Answer to Question #45945 in Statistics and Probability for Malory

Question #45945
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 &quot;boom&quot; 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 &quot;boom&quot; 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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