Suppose that the percentage annual requite you achieve when you endow a dollar in gold or the store chaffer is trusting on the unconcealed recite of the general rule as indicated underneath. For model, the verisimilitude that the rule conciliate be in "boom" recite is 0.15. In this subject, if you endow in the store chaffer your requite is conducive to be 25%; on the other influence if you endow in gold when the rule is in a "boom" recite your requite conciliate be minus 30%. Likewise for the other potential recites of the rule. Note that the sum of the probabilities has to be 1--and is.
State of rule 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 requite, would you rather endow your currency in the store chaffer or in gold? Why?
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