Choosing between stock options
You want to invest in some stock options. After doing some research, you have a list of three stock options: A, B and C. To help you decide which will be more profitable in the long run, you've looked up some historical data and determined the following outcomes and probabilities:
| Stock | Bad market (20%) | Stable market (40%) | Good Market (40%) |
|---|---|---|---|
| Stock A | -8% | 6% | 16% |
| Stock B | -6% | 5% | 9% |
| Stock C | -8% | 7% | 12% |
You can ask your AI assistant here what the expected value is for each stock option.
Which stock option should you invest in according to the expected value calculation?
This exercise is part of the course
Advanced Probability: Uncertainty in Data
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