Investment Expert

As a long-time investment expert, you have come to firmly believe in the following rules:

1. If a person is age thirty-five or younger, and is married, then he or she should invest in securities.
2. If a person has less than $20,000 to invest and is looking for long-term return, then he or she should invest in multiple stocks.
3. If a person wants to invest in growth stocks or has an annual income of at least $50,000, then he or she should invest in Macrosoft stock.
4. If a person seeks long-term return, and wants to invest in multiple stocks, then he or she should invest in growth stocks.
5. If a person has less then $20,000 to invest and wants to invest in securities, or if he or she has an annual income of at least $50,000, then he or she should invest in growth stocks.
6. If a person is married, then he or she should look for long-term return.

A. Identify all the underlying conditions and give each a short name. For example:

• M = Person is Married,
• L =Person is looking for Long term return
  

B. Write all the short names on one page and, based on the above rules, connect them in a single diagram using arrows, as follows:

• If A then B: draw this as A ==> B
• If A and B then C: draw this as two arrows pointing to C, one originating from A, the other from B, such that they merge as they approach C
• If A or B then C: draw this as two arrows pointing to C, one originating from A, the other from B

If the diagram becomes too messy and unreadable, re-arrange the items to eliminate crossed lines. Use the drawing capability in MS-Word to draw the arrows.

C. An investor approaches you to seek advice on investing in Macrosoft stock. She is married and has $15,000 to invest. Use the above diagram to figure out what advice you would offer her. Clearly explain your thinking process.

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