Calculate & explain the Expected value of PERFECT INFORMATION :
The investor plans to invest in only one of three alternatives: a high-risk stock, a low-risk stock, or a savings account that pays a sure $500. To invest in either stock, the investor must pay a brokerage fee of $200. If the market goes up, the value of the high-risk stock will increase by $1,700, and the value of the low-risk stock will increase by $1,200. If the market stays at the same level, the value will increase by $300 for the high-risk stock, and the value will increase by $400 for the low-risk stock. If the market goes down, the value of the high-risk stock will decrease by $800, and the value of the low risk stock will increase by $100. All of these stock payoffs must be adjusted to cover the $200 brokerage fee. There is a 0.5 probability that the market will go up, a 0.3 probability that it will stay at the same level, and a 0.2 probability to go down.
