Mr. Bull owns stocks in company ABC and needs to make a decision on whether...
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Accounting
Mr. Bull owns stocks in company ABC and needs to make a decision on whether to sell them at the end of the trading day or to keep the stocks in hopes of having a better return in the future. The options and respective outcomes are represented in the decision tree diagram below. The probability of a Bull market is estimated at 70% , and the probability of a Bear market is 30%. Taking only the information in the decision tree, what is the best decision? keep stocks for an expected $50000 payoff keep stocks for a $80000 payoff sell the stocks for an expected $50000 payoff sell stocks for a payoff of $51000
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