Question 1

Look at the utility function graphed below and select the type of decision maker that corresponds to the graph.

Accepted Answer

A) risk neutral 
B) risk taker 
C) risk averter 
D) risk player 
A) risk neutral 
B) risk taker 
C) risk averter 
D) risk player B

Question 2

Instruction 17-1
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 put in every week studying 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.
 $$\begin{array} { | l | l | l | l | } 
\hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \
\hline \text { Easy Exam } & 40 & 60 & 80 \
\hline \text { Difficult Exam } & 100 & 50 & 0 \
\hline
\end{array}$$
-Referring to Instruction 17-1,what is the expected monetary value of spending 16 hours per week on average studying for the exam?

Accepted Answer

76

Question 3

Instruction 17-2
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$\begin{array} { c r r r } 
States & A 1 & A 2 & A 3 \
\hline 1 & 12 & - 2 & 8 \
2 & 4 & 10 & 5
\end{array}$
where: $\quad S 1$ is event $1 \quad A 1$ is action alternative 1 
$\quad\quad\quad\quad S 2$ is event $2 \quad A 2$ is action alternative 2 
$\quad\quad\quad\quad\quad\quad\quad A 3$ is action alternative 3
-Referring to Instruction 17-2,if the probability of S1 is 0.2 and S2 is 0.8,then the expected opportunity loss (EOL)for A1 is

Accepted Answer

A) 4.8. 
B) 0. 
C) 5.6. 
D) 1.2. 
A) 4.8. 
B) 0. 
C) 5.6. 
D) 1.2. A

Question 4

Instruction 17-3
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 Instruction 17-3,the return to risk ratio (RTRR)for Action B is

Accepted Answer

A) 9.0. 
B) 3.0. 
C) 0.167. 
D) 6.0. 
A) 9.0. 
B) 3.0. 
C) 0.167. 
D) 6.0.

Question 5

Instruction 17-2
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$\begin{array} { c r r r } 
States & A 1 & A 2 & A 3 \
\hline 1 & 12 & - 2 & 8 \
2 & 4 & 10 & 5
\end{array}$
where: $\quad S 1$ is event $1 \quad A 1$ is action alternative 1 
$\quad\quad\quad\quad S 2$ is event $2 \quad A 2$ is action alternative 2 
$\quad\quad\quad\quad\quad\quad\quad A 3$ is action alternative 3
-Referring to Instruction 17-2,if the probability of S1 is 0.4,then the probability of S2 is

Accepted Answer

A) 1.0. 
B) 0.6. 
C) 0.4. 
D) 0.5. 
A) 1.0. 
B) 0.6. 
C) 0.4. 
D) 0.5.

Question 6

Instruction 17-1
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 put in every week studying 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.
 $$\begin{array} { | l | l | l | l | } 
\hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \
\hline \text { Easy Exam } & 40 & 60 & 80 \
\hline \text { Difficult Exam } & 100 & 50 & 0 \
\hline
\end{array}$$
-Referring to Instruction 17-1,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?

Accepted Answer

The answer of Instruction 17-1
A student wanted to find out...

Question 7

Instruction 17-1
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 put in every week studying 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.
 $$\begin{array} { | l | l | l | l | } 
\hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \
\hline \text { Easy Exam } & 40 & 60 & 80 \
\hline \text { Difficult Exam } & 100 & 50 & 0 \
\hline
\end{array}$$
-Referring to Instruction 17-1,what is the expected monetary value of spending 8 hours per week on average studying for the exam?

Accepted Answer

The answer of Instruction 17-1
A student wanted to find out...

Question 8

Instruction 17-3
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 Instruction 17-3,what is the optimal action using the expected monetary value (EMV)criterion?

Accepted Answer

A) Action A. 
B) Action B. 
C) Either Action A or Action B. 
D) It cannot be determined. 
A) Action A. 
B) Action B. 
C) Either Action A or Action B. 
D) It cannot be determined.

Question 9

Instruction 17-6
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 put in every week studying 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.
 $$\begin{array} { | l | l | l | l | } 
\hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \
\hline \text { Easy Exam } & 40 & 60 & 80 \
\hline \text { Difficult Exam } & 100 & 50 & 0 \
\hline
\end{array}$$
-Referring to Instruction 17-6,the optimal strategy using the expected opportunity loss (EOL)criterion is to study 16 hours per week on average for the exam.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) profit seeker 
B) risk taker 
C) risk neutral 
D) risk averter 
A) profit seeker 
B) risk taker 
C) risk neutral 
D) risk averter

Question 11

For a potential investment of $5,000,a portfolio has an expected monetary value (EMV)of $1,000 and a standard deviation of $100.What is the rate of return?

Accepted Answer

A) 10% 
B) 50% 
C) 20% 
D) 5% 
A) 10% 
B) 50% 
C) 20% 
D) 5%

Question 12

Instruction 17-6
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 put in every week studying 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.
 $$\begin{array} { | l | l | l | l | } 
\hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \
\hline \text { Easy Exam } & 40 & 60 & 80 \
\hline \text { Difficult Exam } & 100 & 50 & 0 \
\hline
\end{array}$$
-Referring to Instruction 17-6,the optimal strategy using the return-to-risk ratio (RTRR)criterion is to study 8 hours per week on average for the exam.

Accepted Answer

A) True 
 B)False

Question 13

Instruction 17-7
The following payoff table shows profits associated with a set of two alternatives under three possible events.
$\begin{array} { r c c } 
\text { Event } & \text { Action A } & \text { Action B } \
\hline 1 & 1000 & 1200 \
2 & 500 & 700 \
3 & 300 & - 200
\end{array}$
-Referring to Instruction 17-7,what is the standard deviation for Action A?

Accepted Answer

The answer of Instruction 17-7
The following payoff table shows profits...

Question 14

A company that manufactures designer jeans is contemplating whether to increase its advertising budget by $1 million for next year.If the expanded advertising campaign is successful,the company expects sales to increase by $1.6 million next year.If the advertising campaign fails,the company expects sales to increase by only $400,000 next year.If the advertising budget is not increased,the company expects sales to increase by $200,000.Identify the payoff in this decision-making problem.

Accepted Answer

A) Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. 
B) Two possibilities: (1)campaign is successful and (2)campaign is not successful. 
C) Two choices: (1)increase the budget and (2)do not increase the budget. 
D) The increase in sales dollars next year. 
A) Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. 
B) Two possibilities: (1)campaign is successful and (2)campaign is not successful. 
C) Two choices: (1)increase the budget and (2)do not increase the budget. 
D) The increase in sales dollars next year.

Question 15

Instruction 17-4
The following information is from two investment opportunities.
$\begin{array} { r r r } &A & B \\text {Expected monetary value}& \$ 900 & \$ 600 \\text {Standard deviation}& 100 & 50 \end{array}$
-Referring to Instruction 17-4,what is the coefficient of variation for investment A?

Accepted Answer

A) 5.0% 
B) 11.1% 
C) 8.3% 
D) 90.0% 
A) 5.0% 
B) 11.1% 
C) 8.3% 
D) 90.0%

Question 16

Instruction 17-2
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$\begin{array} { c r r r } 
States & A 1 & A 2 & A 3 \
\hline 1 & 12 & - 2 & 8 \
2 & 4 & 10 & 5
\end{array}$
where: $\quad S 1$ is event $1 \quad A 1$ is action alternative 1 
$\quad\quad\quad\quad S 2$ is event $2 \quad A 2$ is action alternative 2 
$\quad\quad\quad\quad\quad\quad\quad A 3$ is action alternative 3
-Referring to Instruction 17-2,if the probability of S1 is 0.5,then the coefficient of variation for A2 is

Accepted Answer

A) 0.231. 
B) 2. 
C) 1.5. 
D) 0.5. 
A) 0.231. 
B) 2. 
C) 1.5. 
D) 0.5.

Question 17

In portfolio analysis,the ________ is the reciprocal of the return to risk ratio.

Accepted Answer

coefficien

Question 18

A company that manufactures designer jeans is contemplating whether to increase its advertising budget by $1 million for next year.If the expanded advertising campaign is successful,the company expects sales to increase by $1.6 million next year.If the advertising campaign fails,the company expects sales to increase by only $400,000 next year.If the advertising budget is not increased,the company expects sales to increase by $200,000.Identify the events in this decision-making problem.

Accepted Answer

A) Two choices: (1)increase the budget and (2)do not increase the budget. 
B) Two possibilities: (1)campaign is successful and (2)campaign is not successful. 
C) Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. 
D) The increase in sales dollars next year. 
A) Two choices: (1)increase the budget and (2)do not increase the budget. 
B) Two possibilities: (1)campaign is successful and (2)campaign is not successful. 
C) Four consequences resulting from the Increase/Do Not Increase and Successful/Not Successful combinations. 
D) The increase in sales dollars next year.

Question 19

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.If the probability of selling 100 dozen roses is 0.2 and 200 dozen roses is 0.5,then the probability of selling 400 dozen roses is

Accepted Answer

A) 0.7. 
B) 0.5. 
C) 0.2. 
D) 0.3. 
A) 0.7. 
B) 0.5. 
C) 0.2. 
D) 0.3.

Question 20

In a local mobile phone area,company A accounts for 60% of the mobile phone market,while company B accounts for the remaining 40% of the market.Of the mobile calls made with company A,1% of the calls will have some sort of interference,while 2% of the mobile calls with company B will have interference.If a mobile call is selected at random,the probability that it will not have interference is

Accepted Answer

A) 0.14. 
B) 0.014. 
C) 0.028. 
D) 0.986. 
A) 0.14. 
B) 0.014. 
C) 0.028. 
D) 0.986.

Look at the utility function graphed below and select the type of decision maker that corresponds to the graph.

Instruction 17-3 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 Instruction 17-3,the return to risk ratio (RTRR)for Action B is

Instruction 17-3 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 Instruction 17-3,what is the optimal action using the expected monetary value (EMV)criterion?

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

For a potential investment of $5,000,a portfolio has an expected monetary value (EMV)of $1,000 and a standard deviation of $100.What is the rate of return?

Instruction 17-7 The following payoff table shows profits associated with a set of two alternatives under three possible events. Event Action A Action B 1 1000 1200 2 500 700 3 300 -200 -Referring to Instruction 17-7,what is the standard deviation for Action A?

Instruction 17-4 The following information is from two investment opportunities. A B Expected monetary value \ 900 \ 600 Standard deviation 100 50 -Referring to Instruction 17-4,what is the coefficient of variation for investment A?

In portfolio analysis,the ________ is the reciprocal of the return to risk ratio.

Introduction and Data Collection

Presenting Data in Tables and Charts

Numerical Descriptive Measures

Basic Probability

Some Important Discrete Probability Distributions

The Normal Distribution and Other Continuous Distributions

Sampling Distributions

Confidence Interval Estimation

Fundamentals of Hypothesis Testing: One-Sample Tests

Hypothesis Testing: Two Sample Tests

Analysis of Variance

Simple Linear Regression

Introduction to Multiple Regression

Time-Series Forecasting and Index Numbers

Chi-Square Tests

Multiple Regression Model Building

Statistical Applications in Quality and Productivity Management

Further Non-Parametric Tests

Filters

Exam 17: Decision Making

Look at the utility function graphed below and select the type of decision maker that corresponds to the graph.

Instruction 17-3 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 Instruction 17-3,the return to risk ratio (RTRR)for Action B is

Instruction 17-3 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 Instruction 17-3,what is the optimal action using the expected monetary value (EMV)criterion?

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

For a potential investment of $5,000,a portfolio has an expected monetary value (EMV)of $1,000 and a standard deviation of $100.What is the rate of return?

Instruction 17-7 The following payoff table shows profits associated with a set of two alternatives under three possible events. Event Action A Action B 1 1000 1200 2 500 700 3 300 -200 -Referring to Instruction 17-7,what is the standard deviation for Action A?

Instruction 17-4 The following information is from two investment opportunities. A B Expected monetary value \ 900 \ 600 Standard deviation 100 50 -Referring to Instruction 17-4,what is the coefficient of variation for investment A?

In portfolio analysis,the ________ is the reciprocal of the return to risk ratio.

Introduction and Data Collection

Presenting Data in Tables and Charts

Numerical Descriptive Measures

Basic Probability

Some Important Discrete Probability Distributions

The Normal Distribution and Other Continuous Distributions

Sampling Distributions

Confidence Interval Estimation

Fundamentals of Hypothesis Testing: One-Sample Tests

Hypothesis Testing: Two Sample Tests

Analysis of Variance

Simple Linear Regression

Introduction to Multiple Regression

Time-Series Forecasting and Index Numbers

Chi-Square Tests

Multiple Regression Model Building

Statistical Applications in Quality and Productivity Management

Further Non-Parametric Tests

Filters