Exam 17: An Introduction to Decision Theory

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 $1,675. ii. The Expected value of perfect information is $75. iii. The Expected value of perfect information is $180.

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 $20. ii. The Expected Opportunity Loss for Company B is $120. iii. The Expected Opportunity Loss for Company C is $440.

You have a decision to invest $10,000 in any of four different companies. You estimate the probabilities that the economy will be favourable or unfavourable and you estimate the percent returns over the next year. What is the expected value for Company 3?

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 $1,600. iii. The Expected Monetary Value for Company C is $1,475.

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 $20. ii. The Expected Opportunity Loss for Company B is $75. iii. The Expected Opportunity Loss for Company C is $440.

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 $200.

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 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.

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.

An investor has a 35% chance of making $1000 and a 65% chance of making $10 000, what is the expected payoff for this investor?

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 ___________.

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.

Given the payoff table below, determine the profit and size of warehouse that would be built, using the maximax criterion.

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.