Accession Number : AD0433274

Title :   ECONOMIC SELECTION OF ALTERNATIVE RISK INVESTMENTS,

Corporate Author : RAND CORP SANTA MONICA CALIF

Personal Author(s) : English,J. M. ; Haase,R. H.

Report Date : FEB 1963

Pagination or Media Count : 17

Abstract : This study considers the selection of the best of a number of alternative investments for situations where the alternatives involve different cash flows. It proposes a method for comparing pairs of alternatives in terms of an acceptable minimal risk rate-of-return. The pro1ection of future incomes and expenses is assumed to be approximated by, but not limited to, continuous functions. Values of future sums are discounted continuously. The criterion of choice introduces an expectation-variance principle such that the computed rate-of-return is established at some specified level of confidence. The technique provides a means of comparing alternatives in which the probabilities of the estimates differ for the several alternatives. The paper suggests that the method offers a better way to account for risk than the usual procedure of including it in the interest rate. (Author)

Descriptors :   (*ECONOMICS, BANKING), (*BANKING, ECONOMICS), PROBABILITY, TEST METHODS, STATISTICAL DATA, MATHEMATICAL PREDICTION, MANAGEMENT ENGINEERING, ENGINEERING, INDUSTRIES

Distribution Statement : APPROVED FOR PUBLIC RELEASE