Exam 16: Decision Making and Payoff Tables in Investment Scenarios

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 $0. iii. The Opportunity Loss for Company C is $50.

You have a decision to invest $10,000 in any of four different companies. You estimate the Probabilities that the economy will be favorable or unfavorable and you estimate the percent Returns over the next year. Based on expected value, what company do you choose?

i. In the ratio-to-moving-average procedure, using the median or modified mean eliminates trend. ii. In the final step, using the ratio-to-moving-average method on quarterly data, the total of the Modified means should theoretically be equal to 400 because the average of should be 100. iii. Seasonal variation is quite common in the retail and wholesale industries.

i. A typical monthly seasonal index of 107.0 indicates that sales (or whatever the variable is) are 7 Percent above the annual average. ii. For a quarterly time series, the initial step, using the ratio-to-moving average method, is to Remove the seasonal components from the time series using a 3-month centered moving average. iii. In the final step, using the ratio-to-moving-average method on quarterly data, the total of the Modified means should theoretically be equal to 400 because the average of should be 100.

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 following table lists the average price of home listings in Canada from January 2007 to January 2014. (See Connect for Data Set 7: CREA 2014). Forecast the average home price listing for Jan-17.

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2009?

i. In the linear trend equation, the letter "b" is the average change in t for each change of one unit (either increase or decrease) in y. ii. The least squares method of computing the equation for a straight line going through the data of Interest gives the "best fitting" line. iii. A straight-line trend equation is used to represent the time series when it is believed that the Data is increasing (or decreasing) by equal amounts, on the average, from one period to another.

i. In the final step, using the ratio-to-moving-average method on quarterly data, the total of the Modified means should theoretically be equal to 400 because the average of should be 100. ii. Seasonal variation is quite common in the retail and wholesale industries. iii. A typical seasonal index of 103.7 for January indicates that sales for January are below the Annual average.

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.

A payoff table is needed to:

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 perfect information is $120. iii. The Expected value of perfect information is $180.

The Westberg Electric Company sells electric motors. The monthly trend equation, based on four Years of monthly data, is Y' = 4.4 + 0.5t. The seasonal factor for the month of May is 85. Determine The seasonally adjusted forecast for May of the fifth year.

For the below payoff table, if P(S1) = 0.3, P(S2) = 0.5 and P(S3) = 0.2, what decision would you recommend?

The table below shows the sales for a plastics manufacturer recorded over the past year. The Seasonal indexes for each quarter are also provided. To track the trend for these four quarters, use The indexes to deseasonalize the sales data. Overall, based on these four quarters, sales:

i. The moving average method merely smooths out the fluctuations in the data. ii. To apply the moving average method to a time series, the data should follow a linear trend and Have a definite rhythmic pattern of fluctuations that repeat (say, every three years). iii. Sales, production and other economic and business series usually have periods of oscillation that Are of equal length or identical amplitudes.

The following table lists the average price of home listings in Canada from January 2007 to January 2014. (See Connect for Data Set 7: CREA 2014). Forecast the average home price listing for Jan-15.

Since a ski resort does most of its business in the winter, what is the major source of variation in Income due to?

Listed below is the net sales in $ million for Home Depot Inc., and its subsidiaries from 1994 to 2003. Using the printout below, what are the estimated sales for 2008?

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.