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Exam 17: An Introduction to Decision Theory

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Exam 17: An Introduction to Decision Theory37 Questionsadd course
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You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.5, which of the following statements are correct? i. The Expected value of stock purchased under conditions of certainty is $1,980. ii. The Expected value of perfect information is $75. iii. The Expected value of perfect information is $180. If the probability of the market declining in the next year is 0.5, which of the following statements are correct? i. The Expected value of stock purchased under conditions of certainty is $1,980. ii. The Expected value of perfect information is $75. iii. The Expected value of perfect information is $180.

(Multiple Choice)
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Question 21

The alternative which offers the lowest EOL is the same as the one which

(Multiple Choice)
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Question 22

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the market declines in the next year, which of the following statements are correct? i. The Opportunity Loss for Company A is $250. ii. The Opportunity Loss for Company B is $150. iii. The Opportunity Loss for Company C is $0. If the market declines in the next year, which of the following statements are correct? i. The Opportunity Loss for Company A is $250. ii. The Opportunity Loss for Company B is $150. iii. The Opportunity Loss for Company C is $0.

(Multiple Choice)
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Question 23

A payoff table is needed to:

(Multiple Choice)
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Question 24

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.4, which of the following statements are correct? i. The Expected Opportunity Loss for Company A is $300. ii. The Expected Opportunity Loss for Company B is $30. iii. The Expected Opportunity Loss for Company C is $500. If the probability of the market declining in the next year is 0.4, which of the following statements are correct? i. The Expected Opportunity Loss for Company A is $300. ii. The Expected Opportunity Loss for Company B is $30. iii. The Expected Opportunity Loss for Company C is $500.

(Multiple Choice)
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Question 25

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the market rises in the next year, which of the following statements are correct? i. The Opportunity Loss for Company A is $200. ii. The Opportunity Loss for Company B is $200. iii. The Opportunity Loss for Company C is $700. If the market rises in the next year, which of the following statements are correct? i. The Opportunity Loss for Company A is $200. ii. The Opportunity Loss for Company B is $200. iii. The Opportunity Loss for Company C is $700.

(Multiple Choice)
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Question 26

Given the following decision table in which x, y, and z are decision alternatives and A and B are states of nature. Given the following decision table in which x, y, and z are decision alternatives and A and B are states of nature. Which alternative would be chosen if using the maximax criterion? Which alternative would be chosen if using the maximax criterion?

(Multiple Choice)
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Question 27

Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. The expected value for decision w is__________ The expected value for decision w is__________

(Multiple Choice)
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Question 28

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the Market rising in the next year is 0.60, which of the following statements are correct? i. The Opportunity Loss for Company A is $1,860. ii. The Opportunity Loss for Company B is $1,860. iii. The Opportunity Loss for Company C is $1,540. If the probability of the Market rising in the next year is 0.60, which of the following statements are correct? i. The Opportunity Loss for Company A is $1,860. ii. The Opportunity Loss for Company B is $1,860. iii. The Opportunity Loss for Company C is $1,540.

(Multiple Choice)
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Question 29

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.5, which of the following statements are correct? i. The Expected Opportunity Loss for Company A is $225. ii. The Expected Opportunity Loss for Company B is $75. iii. The Expected Opportunity Loss for Company C is $200. If the probability of the market declining in the next year is 0.5, which of the following statements are correct? i. The Expected Opportunity Loss for Company A is $225. ii. The Expected Opportunity Loss for Company B is $75. iii. The Expected Opportunity Loss for Company C is $200.

(Multiple Choice)
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Question 30

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the Market rising in the next year is 0.50, which of the following statements are correct? i. The Expected Monetary Value for Company A is $1,450. ii. The Expected Monetary Value for Company B is $1,960. iii. The Expected Monetary Value for Company C is $1,500. If the probability of the Market rising in the next year is 0.50, which of the following statements are correct? i. The Expected Monetary Value for Company A is $1,450. ii. The Expected Monetary Value for Company B is $1,960. iii. The Expected Monetary Value for Company C is $1,500.

(Multiple Choice)
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Question 31

Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. The expected value for decision y is__________ The expected value for decision y is__________

(Multiple Choice)
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Question 32

Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. The expected value for decision x is__________ The expected value for decision x is__________

(Multiple Choice)
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Question 33

Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. Consider the following decision table in which w, x, y, and z are decision alternatives and A and B are the two possible states of nature, with probabilities 0.40 and 0.60. The expected value for decision z is__________ The expected value for decision z is__________

(Multiple Choice)
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Question 34

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the market declining in the next year is 0.4, which of the following statements are correct? i. The Expected value of stock purchased under conditions of certainty is $1,980. ii. The Expected value of stock purchased under conditions of certainty is $120. iii. The Expected value of stock purchased under conditions of certainty is $440. If the probability of the market declining in the next year is 0.4, which of the following statements are correct? i. The Expected value of stock purchased under conditions of certainty is $1,980. ii. The Expected value of stock purchased under conditions of certainty is $120. iii. The Expected value of stock purchased under conditions of certainty is $440.

(Multiple Choice)
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Question 35

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the probability of the Market rising in the next year is 0.50, which of the following statements are correct? i. The Opportunity Loss for Company A is $1,460. ii. The Opportunity Loss for Company B is $1,600. iii. The Opportunity Loss for Company C is $1,475. If the probability of the Market rising in the next year is 0.50, which of the following statements are correct? i. The Opportunity Loss for Company A is $1,460. ii. The Opportunity Loss for Company B is $1,600. iii. The Opportunity Loss for Company C is $1,475.

(Multiple Choice)
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Question 36

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the market declines in the next year, which of the following statements are correct? i. The Opportunity Loss for Company A is $300. ii. The Opportunity Loss for Company B is $30. iii. The Opportunity Loss for Company C is $500. If the market declines in the next year, which of the following statements are correct? i. The Opportunity Loss for Company A is $300. ii. The Opportunity Loss for Company B is $30. iii. The Opportunity Loss for Company C is $500.

(Multiple Choice)
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Question 37
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