Exhibit 14.3 The Following Questions Are Based on the Information Below

Multiple Choice

Exhibit 14.3
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem. The investor has estimated the probability of a declining economy at 70% and an expanding economy at 30%.
-Refer to Exhibit 14.3. What formula should go in cell F5 and copied to F6:F8 of the spreadsheet if the expected regret decision rule is to be used?

A) =B$5-MAX(B$5:B$8)
B) =MAX(B$5:B$8) -MAX(B5)
C) =MAX(B$5:B$8) -MIN(B$5:B$8)
D) =MAX(B$5:B$8) -B5