Exam 19: Decision Analysis

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified two alternatives and constructed the following tables which show (1)expected profits (in $10,000's)for various market conditions and their probabilities,and (2)the advisor's track record on predicting Bull and Bear markets: If the advisor predicts a Bear market the revised probability of a Bear market,P (S₂|F₂),is ___.

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified two alternatives and constructed the following tables which show (1)expected profits (in $10,000's)for various market conditions and their probabilities,and (2)the advisor's track record on predicting Bull and Bear markets: If the advisor predicts a Bear market the EMV of the Bonds alternative,using revised probabilities,is ___.

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified two alternatives and constructed the following tables which show (1)expected profits (in $10,000's)for various market conditions and their probabilities,and (2)the advisor's track record on predicting Bull and Bear markets: If the advisor predicts a Bull market the EMV of the Stocks alternative,using revised probabilities,is ___.

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following table which shows expected profits (in $10,000's)for various market conditions and their probabilities: The expected monetary payoff with perfect information is ___.

Ray Crofford is evaluating investment alternatives to invest $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following payoff table which shows expected profits (in $10,000's)for various market conditions: For the 'T-Bills' and 'Bonds' choices,the indifference value of Hurwicz's alpha is ___.

In a decision-making under uncertainty scenario,the best decision alternative based on the strategy of minmax regret will always have zero regret.

In decision-making under risk,the expected monetary value without information is ___.

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified two alternatives and constructed the following tables which show (1)expected profits (in $10,000's)for various market conditions and their probabilities,and (2)the advisor's track record on predicting Bull and Bear markets: The EMV of this investment opportunity with the advisor's prediction is ___.

In a decision analysis problem,variables (such as investing in common stocks or corporate bonds)which are under the decision maker's control are called ___.

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified two alternatives and constructed the following tables which show (1)expected profits (in $10,000's)for various market conditions and their probabilities,and (2)the advisor's track record on predicting Bull and Bear markets: If the advisor predicts a Bull market,the revised probability of a Bull market,P (S₁|F₁),is ___.

The expected monetary value without information is $60,and the expected monetary payoff with perfect information is $120.The expected value of perfect information is __.

In a decision analysis problem,variables (such as general macroeconomic conditions)which are not under the decision maker's control are called prior probabilities.

The expected monetary value without information is $2,500,and the expected monetary payoff with perfect information is $5,000.The expected value of perfect information is ___.

In a decision-making under risk scenario,the expected monetary value of a decision alternative is the arithmetic average of the payoffs to the decision alternative in each state of the nature.

Dan Hein owns the mineral and drilling rights to a 1,000 hectare tract of land.If he drills a well and does not strike oil his net loss will be $50,000,but if he drills a well and strikes oil his net gain will be $100,000.If he does not drill,his loss is the cost of the mineral and drilling rights,which amount to $1000.For Dan's decision problem,the variable "drill the well" is one of the ___.

In a decision-making under risk scenario,the expected monetary value of a decision alternative is the weighted average (using the probability of each state of nature as the weight)of the payoffs to the decision alternative in each state of the nature.

In a decision analysis problem,variables (such as benefits or rewards that result from investments in common stocks or corporate bonds and from a new product launch)which result from selecting a particular decision alternative are called posterior probabilities.

Ray Crofford is evaluating investment alternatives to invest $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following payoff table which shows expected profits (in $10,000's)for various market conditions: If Ray uses the Hurwicz criterion with alpha = 0.5,the appropriate choice is ___.

Ray Crofford is evaluating investment alternatives for the $100,000 which he inherited from his grandfather.His investment advisor has identified four alternatives and constructed the following table which shows expected profits (in $10,000's)for various market conditions and their probabilities: The expected value of perfect information is ___.

Melissa Rossi,Product Manager at National Consumers,Inc.(NCI),is evaluating alternatives for introducing a new package for toothpaste.She has identified four alternative markets,and has constructed the following table which shows NCI's rewards (in $1,000,000's)for various levels of acceptance by the markets and their probabilities: The expected value of perfect information is ___.