Question 1

Bayes' rule is used to:

Accepted Answer

A)  update the prior probabilities once new information is observed. 
B)  turn the given conditional probabilities (i.e. likelihoods) around. 
C)  update the posterior probabilities once new information is observed. 
D)  All of the above are uses for Bayes' rule. 
A)  update the prior probabilities once new information is observed. 
B)  turn the given conditional probabilities (i.e. likelihoods) around. 
C)  update the posterior probabilities once new information is observed. 
D)  All of the above are uses for Bayes' rule.

Question 2

Expected monetary value (EMV)is:

Accepted Answer

A)  the average or expected value of the decision if you knew what would happen ahead of time 
B)  the weighted average of possible monetary values, weighted by their probabilities 
C)  the average or expected value of the information if it was completely accurate 
D)  the amount that you would lose by not picking the best alternative 
A)  the average or expected value of the decision if you knew what would happen ahead of time 
B)  the weighted average of possible monetary values, weighted by their probabilities 
C)  the average or expected value of the information if it was completely accurate 
D)  the amount that you would lose by not picking the best alternative

Question 3

Exhibit 9-1
A farmer must decide whether to take protective action to limit damage to his grapefruit crop in the event that the overnight temperature falls to a level well below freezing. If the temperature drops too low he runs the risk of losing his entire crop, valued at $75,000. Based on the National Weather Service, the probability of such a temperature drop is 60%. He can insulate his crop by spraying water on all the trees, which will cost $20,000. This action might succeed in protecting the crop, with the following $$\begin{array} { l l } 
\text { Probability } & \text { Damage } \
0.30 & \$ 0 \
0.15 & \$ 5,000 \
0.10 & \$ 10,000 \
0.15 & \$ 15,000 \
0.30 & \$ 20,000
\end{array}$$
-Refer to Exhibit 9-1.Find the highest cost of insulating the grapefruits for which the farmer prefers to insulate his crop.

Accepted Answer

By trial and error (or by look

Question 4

The risk profile from Precision Tree shows the probability distribution of monetary outcomes in both graphical and tabular form.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following are probabilities that are conditioned on information that is obtained

Accepted Answer

A)  Prior probabilities 
B)  Posterior probabilities 
C)  Marginal probabilities 
D)  Objective probabilities 
A)  Prior probabilities 
B)  Posterior probabilities 
C)  Marginal probabilities 
D)  Objective probabilities

Question 6

Probabilities on the branches of a chance node may be ____ events that have occurred earlier in the decision tree.

Accepted Answer

A)  marginal due to 
B)  conditional on 
C)  averaged with 
D)  increased by 
A)  marginal due to 
B)  conditional on 
C)  averaged with 
D)  increased by

Question 7

Exhibit 9-2
A customer has approached a local credit union for a $20,000 1-year loan at a 10% interest rate. If the credit union does not approve the loan application, the $20,000 will be invested in bonds that earn a 6% annual return. Without additional information, the credit union believes that there is a 5% chance that this customer will default on the loan, assuming that the loan is approved. If the customer defaults on the loan, the credit union will lose the $20,000.
-Refer to Exhibit 9-2.The bank can thoroughly investigate the customer's credit record and obtain a favorable or unfavorable recommendation.If the credit report is perfectly reliable,what is the most the credit union should be willing to pay for the report

Accepted Answer

@#IMG-DLM& The tree above shows that if the credit

Question 8

Which of the following statements is true concerning decision tree conventions

Accepted Answer

A)  Time proceeds from right to left. 
B)  The trees are composed of circles, triangles and ovals. 
C)  The nodes represent points in time. 
D)  Probabilities of outcomes are shown to the right of the end nodes. 
A)  Time proceeds from right to left. 
B)  The trees are composed of circles, triangles and ovals. 
C)  The nodes represent points in time. 
D)  Probabilities of outcomes are shown to the right of the end nodes.

Question 9

Bayes' rule is used for updating the probability of an uncertain outcome after observing the results of a test or study.

Accepted Answer

A) True 
 B)False

Question 10

Prior probabilities are sometimes called likelihoods,the probabilities that are influenced by information about the outcome of an earlier uncertainty.

Accepted Answer

A) True 
 B)False

Bayes' rule is used to:

Expected monetary value (EMV)is:

The risk profile from Precision Tree shows the probability distribution of monetary outcomes in both graphical and tabular form.

Which of the following are probabilities that are conditioned on information that is obtained

Probabilities on the branches of a chance node may be ____ events that have occurred earlier in the decision tree.

Which of the following statements is true concerning decision tree conventions

Bayes' rule is used for updating the probability of an uncertain outcome after observing the results of a test or study.

Prior probabilities are sometimes called likelihoods,the probabilities that are influenced by information about the outcome of an earlier uncertainty.

Introduction to Modeling

Introduction to Spreadsheet Modeling

Introduction to Optimization Modeling

Linear Programming Models

Network Models

Optimization Models With Integer Variables

Nonlinear Optimization Models

Evolutionary Solver: An Alternative Optimization Procedure

Introduction to Simulation Modeling

Simulation Models

Queueing Models

Regression and Forecasting Models

Data Mining

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Exam 9: Decision Making Under Uncertainty

Bayes' rule is used to:

Expected monetary value (EMV)is:

The risk profile from Precision Tree shows the probability distribution of monetary outcomes in both graphical and tabular form.

Which of the following are probabilities that are conditioned on information that is obtained

Probabilities on the branches of a chance node may be ____ events that have occurred earlier in the decision tree.

Which of the following statements is true concerning decision tree conventions

Bayes' rule is used for updating the probability of an uncertain outcome after observing the results of a test or study.

Prior probabilities are sometimes called likelihoods,the probabilities that are influenced by information about the outcome of an earlier uncertainty.

Introduction to Modeling

Introduction to Spreadsheet Modeling

Introduction to Optimization Modeling

Linear Programming Models

Network Models

Optimization Models With Integer Variables

Nonlinear Optimization Models

Evolutionary Solver: An Alternative Optimization Procedure

Introduction to Simulation Modeling

Simulation Models

Queueing Models

Regression and Forecasting Models

Data Mining

Filters