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Which of the Following Statements Is Likely to Be Correct

Question 55

Multiple Choice

Which of the following statements is likely to be correct for a decision tree that indicates a 30% chance of making a $250,000 profit and a 70% chance of sustaining a $140,000 loss?


A) The decision should be yes whenever the amount of possible profit exceeds the amount of possible loss.
B) The decision should be no whenever there is a possibility of loss.
C) The expected value is positive before discounting.
D) The expected value is negative before discounting.

Correct Answer:

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