Exam 19: Decision Making

TABLE 19-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -For a potential investment of $5,000,a portfolio has an EMV of $1,000 and a standard deviation of $100.What is the coefficient of variation?

TABLE 19-6 A student wanted to find out the optimal strategy to study for a Business Statistics exam.He constructed the following payoff table based on the mean amount of time he needed to study every week for the course and the degree of difficulty of the exam.From the information that he gathered from students who had taken the course,he concluded that there was a 40% probability that the exam would be easy. -Referring to Table 19-6,what is the opportunity loss of spending 4 hours per week on average studying for the exam when the exam turns out to be easy?

The risk-________ curve represents the expected monetary value approach.

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Referring to Table 19-1,the opportunity loss for A3 when S2 occurs is

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Referring to Table 19-1,the opportunity loss for A2 when S1 occurs is

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Blossom's Flowers purchases roses for sale for Valentine's Day.The roses are purchased for $10 a dozen and are sold for $20 a dozen.Any roses not sold on Valentine's Day can be sold for $5 per dozen.The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100,200,or 400 dozen roses.Given 0.2,0.4,and 0.6 are the probabilities for the sale of 100,200,or 400 dozen roses,respectively,then the EVPI for buying roses is

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Blossom's Flowers purchases roses for sale for Valentine's Day.The roses are purchased for $10 a dozen and are sold for $20 a dozen.Any roses not sold on Valentine's Day can be sold for $5 per dozen.The owner will purchase 1 of 3 amounts of roses for Valentine's Day: 100,200,or 400 dozen roses.Given 0.2,0.4,and 0.6 are the probabilities for the sale of 100,200,or 400 dozen roses,respectively,then the optimal EOL for buying roses is

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Referring to Table 19-1,if the probability of S1 is 0.5,then the expected monetary value (EMV)for A1 is

The curve for the ________ will show a rapid increase in utility for initial amounts of money followed by a gradual leveling off for increasing dollar amounts.

A tabular presentation that shows the outcome for each decision alternative under the various states of nature is called

TABLE 19-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -For a potential investment of $5,000,a portfolio has an EMV of $1,000 and a standard deviation of $100.What is the rate of return?

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Referring to Table 19-1,if the probability of S1 is 0.4,then the probability of S2 is

TABLE 19-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -Referring to Table 19-2,the coefficient of variation for Action A is

At Eastern University,60% of the students are from suburban areas,30% are from rural areas,and 10% are from urban areas.Of the students from the suburban areas,60% are nonbusiness majors.Of the students from the rural areas,70% are nonbusiness majors.Of the students from the urban areas,90% are nonbusiness majors.The probability that a randomly selected student is a business major is

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Referring to Table 19-1,what is the best action using the maximax criterion?

TABLE 19-2 The following payoff matrix is given in dollars. Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5. -Referring to Table 19-2,what is the action with the preferable return to risk ratio?

TABLE 19-1 The following payoff table shows profits associated with a set of 3 alternatives under 2 possible states of nature -Referring to Table 19-1,if the probability of S1 is 0.5,then the coefficient of variation for A2 is

TABLE 19-5 The following payoff table shows profits associated with a set of 2 alternatives under 3 possible events. Suppose that the probability of Event 1 is 0.2,Event 2 is 0.5,and Event 3 is 0.3. -Referring to Table 19-5,what is the EVPI for this problem?

True or False: To calculate expected profit under certainty,you need to have perfect information about which event will occur.

TABLE 19-6 A student wanted to find out the optimal strategy to study for a Business Statistics exam.He constructed the following payoff table based on the mean amount of time he needed to study every week for the course and the degree of difficulty of the exam.From the information that he gathered from students who had taken the course,he concluded that there was a 40% probability that the exam would be easy. -True or False: Referring to Table 19-6,the optimal strategy using the expected monetary value criterion is to study 16 hours per week on average for the exam.