Question 1

Every nonprobabilistic method has a weakness for decision making. Which of the following is incorrect regarding a method and its weakness?&#10;A)The maximax method ignores potentially large losses.&#10;B)The maximin method ignores potentially large payoffs.&#10;C)The minimax regret method can lead to inconsistent decisions.&#10;D)All of these are correct.

Accepted Answer

All of these statements are correct. The maximax method focuses solely on the best possible outcome and ignores potential losses. The maximin method only considers the minimum possible payoff, ignoring the potential for large gains. The minimax regret method can be inconsistent because it involves comparing regrets and different individuals may regret different outcomes differently. Therefore, all nonprobabilistic methods have limitations and weaknesses in decision making.

Question 2

&#10;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.&#10;  &#10;&#10;-Refer to Exhibit 14.1. What decision should be made according to the maximax decision rule?&#10;A)A&#10;B)B&#10;C)C&#10;D)Bank

Accepted Answer

According to maximax decision rule, we choose the alternative that has the maximum possible payoff. In this case, for each economic climate (expand or decline), investment A has the highest payoff. Therefore, investment A should be chosen.

Question 3

The amount of opportunity lost in making a decision is called&#10;A)loss.&#10;B)frustration.&#10;C)negative profit.&#10;D)regret.

Accepted Answer

Regret is the term used to describe the amount of opportunity lost when a decision is made, reflecting on what could have been gained from the best forgone option.

Question 4

A payoff matrix depicts ____ versus ____ with payoffs for each intersection cell.&#10;A)decision criteria; states of nature.&#10;B)decision alternatives; potential outcomes.&#10;C)decision alternatives; states of nature.&#10;D)decision criteria; potential outcomes.

Accepted Answer

A payoff matrix typically depicts decision alternatives versus states of nature, with each cell in the matrix showing the payoff (or outcome) for a combination of a decision alternative and a state of nature.

Question 5

Which decision rule optimistically assumes that nature will always be &#34;on our side&#34; regardless of what decision we make?&#10;A)maximax decision rule.&#10;B)maximin decision rule.&#10;C)minimax regret decision rule.&#10;D)minimin decision rule.

Accepted Answer

The maximax decision rule assumes that nature will always be "on our side" and thus, selects the decision alternative that maximizes the maximum possible outcome.

Question 6

How are states of nature assigned probabilities?&#10;A)Use historical data.&#10;B)Use best judgements.&#10;C)Use interview results.&#10;D)All of these.

Accepted Answer

States of nature can be assigned probabilities using historical data, best judgments, or interviews. Therefore, all of these options are valid ways to assign probabilities.

Question 7

Decision Analysis techniques provide modeling techniques to help decision makers make decisions. Which of the following is not typically a benefit of decision analysis?&#10;A)Incorporating uncertainty via probabilities.&#10;B)Incorporating risk via utility theory functions.&#10;C)Incorporating uncertainty via exponential distributions.&#10;D)Structuring decision strategies via decision trees.

Accepted Answer

Exponential distributions are not typically used to incorporate uncertainty in decision analysis. Instead, probability distributions such as normal, binomial or Poisson distributions are commonly used. A and B are benefits of decision analysis, as they allow for quantification of uncertainty and risk. D is also a benefit as decision trees can help visualize and structure decision strategies.

Question 8

The decision rule which determines the maximum payoff for each alternative and then selects the alternative associated with the largest payoff is the&#10;A)maximax decision rule.&#10;B)maximin decision rule.&#10;C)minimax regret decision rule.&#10;D)minimin decision rule.

Accepted Answer

The maximax decision rule selects the alternative with the maximum possible payoff. This decision rule is suitable for risk-takers who are optimistic and are interested in selecting the alternative with the best possible outcome. The decision rule aims to maximize the potential gain without considering the probability of occurrence or loss.

Question 9

The decision rule which determines the minimum payoff for each alternative and then selects the alternative associated with the largest minimum payoff is the&#10;A)maximax decision rule.&#10;B)maximin decision rule.&#10;C)minimax regret decision rule.&#10;D)minimin decision rule.

Accepted Answer

The maximin decision rule prioritizes the minimum payoff of each alternative, selecting the alternative with the largest minimum payoff. This rule is often used by decision-makers who are risk-averse and prioritize avoiding losses over maximizing gains.

Question 10

The ____ in a decision problem represent factors that are important to the decision maker.&#10;A)payoffs&#10;B)states of nature&#10;C)criteria&#10;D)alternatives

Accepted Answer

Criteria represent the factors that are important to the decision maker and are used to evaluate the alternatives. Payoffs are the outcomes associated with each alternative, states of nature are the various circumstances or events that may affect the outcome of the decision, and alternatives are the various courses of action that the decision maker can choose from. Therefore, C is the correct answer as it directly relates to the factors that are important to the decision maker.

Question 11

The category of decision rules that contains the maximax decision rule is the&#10;A)optimistic category.&#10;B)non-probabilistic category.&#10;C)probabilistic category.&#10;D)optimality category.

Accepted Answer

The answer of The category of decision rules that contains...

Question 12

A course of action intended to solve a problem is called a(n)&#10;A)alternative.&#10;B)option.&#10;C)decision.&#10;D)criteria.

Accepted Answer

The answer of A course of action intended to solve...

Question 13

Decision analysis supports all but one of the following goals. Which goal is not supported?&#10;A)Help make good decisions.&#10;B)Help ensure selection of good outcomes.&#10;C)Analyze decision problems logically.&#10;D)Incorporate problem uncertainty.

Accepted Answer

The answer of Decision analysis supports all but one of...

Question 14

Which decision rule pessimistically assumes that nature will always be &#34;against us&#34; regardless of what decision we make?&#10;A)maximax decision rule.&#10;B)maximin decision rule.&#10;C)minimax regret decision rule.&#10;D)minimin decision rule.

Accepted Answer

The answer of Which decision rule pessimistically assumes that nature...

Question 15

Which of the following is a goal of decision analysis?&#10;A)Help individuals make good decisions.&#10;B)Ensure decisions lead to good outcomes.&#10;C)Avoiding decisions leading to bad outcomes.&#10;D)Reduce the role of luck in a decision.

Accepted Answer

The answer of Which of the following is a goal...

Question 16

Which of the following summarizes the final outcome for each decision alternative?&#10;A)payoff matrix&#10;B)outcome matrix&#10;C)yield matrix&#10;D)performance matrix

Accepted Answer

The answer of Which of the following summarizes the final...

Question 17

The decision rule which selects the alternative associated with the smallest maximum opportunity loss is the&#10;A)maximax decision rule.&#10;B)maximin decision rule.&#10;C)minimax regret decision rule.&#10;D)minimin decision rule.

Accepted Answer

The answer of The decision rule which selects the alternative...

Question 18

A(n) ____ is a course of action intended to solve a problem.&#10;A)decision&#10;B)criteria&#10;C)state of nature&#10;D)alternative

Accepted Answer

The answer of A(n) ____ is a course of action...

Question 19

The ____ correspond to future events that are not under the control of the decision maker.&#10;A)payoffs&#10;B)states of nature&#10;C)criteria&#10;D)alternatives

Accepted Answer

The answer of The ____ correspond to future events that...

Question 20

Although modeling provides valuable insight to decision makers, decision making remains a difficult task. Which of the following is not a primary cause for this difficulty discussed in the Decision Analysis chapter?

A)Uncertainty regarding the future.
B)Models provide decisions for the decision maker.
C)Conflicting values.
D)Conflicting objectives.

Accepted Answer

The answer of Although modeling provides valuable insight to decision...

Question 21

&#10;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.&#10;  &#10;&#10;-Refer to Exhibit 14.1. What formula should go in cell D5 to implement the maximin decision rule?&#10;A)=MAX(MIN(B5:C5))&#10;B)=MIN(B5:C5)&#10;C)=AVERAGE(B5:C5)&#10;D)=MAX(B5:C5)

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 22

Expected regret is also called&#10;A)EMV.&#10;B)EOL.&#10;C)EPA.&#10;D)EOQ.

Accepted Answer

The answer of Expected regret is also called&#10;A)EMV.&#10;B)EOL.&#10;C)EPA.&#10;D)EOQ....

Question 23

The minimum EOL in a decision problem will always&#10;A)exceed the EVPI.&#10;B)be less than the EVPI.&#10;C)equal the EVPI.&#10;D)equal the EMV.

Accepted Answer

The answer of The minimum EOL in a decision problem...

Question 24

&#10;  &#10;&#10;-Refer to Exhibit 14.4. What formula should go in cell D14 of the spreadsheet to compute the EVPI?&#10;A)MAX(D5:D8)-D12&#10;B)D12-MIN(D5:D8)&#10;C)SUMPRODUCT(B12:C12,B10:C10)-MAX(D5:D8)&#10;D)D12-MAX(D5:D8)

Accepted Answer

The answer of  &#10;  &#10;&#10;-Refer to Exhibit 14.4....

Question 25

&#10;An investor is considering 4 investments, A, B, C, D. 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 decision tree has been developed for the problem. The investor has estimated the probability of a declining economy at 40% and an expanding economy at 60%.  &#10;&#10;-Refer to Exhibit 14.5. What is the correct decision for this investor based on an expected monetary value criteria?&#10;A)A&#10;B)B&#10;C)C&#10;D)D

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 26

A square node in a decision tree is called a(n) ____ node.&#10;A)chance&#10;B)random&#10;C)decision&#10;D)event

Accepted Answer

The answer of A square node in a decision tree...

Question 27

The decision with the smallest expected opportunity loss (EOL) will also have the&#10;A)smallest EMV.&#10;B)largest EMV.&#10;C)smallest regret.&#10;D)largest regret.

Accepted Answer

The answer of The decision with the smallest expected opportunity...

Question 28

&#10;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%.&#10;  &#10;&#10;-Refer to Exhibit 14.3. What decision should be made according to the expected monetary value decision rule?&#10;A)A&#10;B)B&#10;C)C&#10;D)Bank

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 29

&#10;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.&#10;  &#10;&#10;-Refer to Exhibit 14.2. What formula should go in cell H5 and copied to H6:H8 of the Regret Table above to implement the minimax regret decision rule?&#10;A)=MAX(MAX(F5:G5))&#10;B)=MIN(F5:G5)&#10;C)=AVERAGE(F5:G5)&#10;D)=MAX(F5:G5)

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 30

&#10;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.&#10;  &#10;&#10;-Refer to Exhibit 14.1. What decision should be made according to the minimax regret decision rule?&#10;A)A&#10;B)B&#10;C)C&#10;D)Bank

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 31

Leaves of a decision tree are also called ____ nodes.&#10;A)end&#10;B)terminal&#10;C)decision&#10;D)payoff

Accepted Answer

The answer of Leaves of a decision tree are also...

Question 32

&#10;  &#10;&#10;-Refer to Exhibit 14.4. What is the expected value with perfect information for the investor?&#10;A)13.5&#10;B)45.5&#10;C)59&#10;D)80

Accepted Answer

The answer of  &#10;  &#10;&#10;-Refer to Exhibit 14.4....

Question 33

Probabilistic decision rules can be used if the states of nature in a decision problem can be assigned probabilities that represent their likelihood of occurrence. Which of the following is not true regarding the probabilities employed?

A)The probabilities are always obtained from historical data.
B)The probabilities must always be unbiased.
C)The probabilities can be assigned subjectively.
D)Subjective probabilities obtained can be accurate and unbiased.

Accepted Answer

The answer of Probabilistic decision rules can be used if...

Question 34

&#10;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%.&#10;  &#10;&#10;-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?&#10;A)=B$5-MAX(B$5:B$8)&#10;B)=MAX(B$5:B$8)-MAX(B5)&#10;C)=MAX(B$5:B$8)-MIN(B$5:B$8)&#10;D)=MAX(B$5:B$8)-B5

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 35

&#10;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.&#10;  &#10;&#10;-Refer to Exhibit 14.2. What formula should go in cell F5 of the Regret Matrix above to compute the regret value?&#10;A)=B$5-MAX(B$5:B$8)&#10;B)=MAX(B$5:B$8)-MAX(B5)&#10;C)=MAX(B$5:B$8)-MIN(B$5:B$8)&#10;D)=MAX(B$5:B$8)-B5

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 36

&#10;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.&#10;  &#10;&#10;-Refer to Exhibit 14.1. What formula should go in cell D5 to implement the maximax decision rule?&#10;A)=MAX(MAX(B5:C5))&#10;B)=MIN(B5:C5)&#10;C)=AVERAGE(B5:C5)&#10;D)=MAX(B5:C5)

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 37

&#10;  &#10;&#10;-Refer to Exhibit 14.4. What is the expected value of perfect information for the investor?&#10;A)13.5&#10;B)20&#10;C)45.5&#10;D)59

Accepted Answer

The answer of  &#10;  &#10;&#10;-Refer to Exhibit 14.4....

Question 38

&#10;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.&#10;  &#10;&#10;-Refer to Exhibit 14.1. What decision should be made according to the maximin decision rule?&#10;A)A&#10;B)B&#10;C)C&#10;D)Bank

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 39

&#10;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%.&#10;  &#10;&#10;-Refer to Exhibit 14.3. What decision should be made according to the expected regret decision rule?&#10;A)A&#10;B)B&#10;C)C&#10;D)Bank

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 40

A circular node in a decision tree is called a(n) ____ node.&#10;A)chance&#10;B)random&#10;C)decision&#10;D)event

Accepted Answer

The answer of A circular node in a decision tree...

Question 41

The scores in a scoring model can be thought of as subjective assessments of&#10;A)usefulness.&#10;B)worthiness.&#10;C)utility.&#10;D)payoff.

Accepted Answer

The answer of The scores in a scoring model can...

Question 42

&#10;The following questions use the information below.&#10;A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent between the two alternatives when p = 0.45.&#10;  &#10;&#10;-Refer to Exhibit 14.7. What is the decision maker's risk premium for this problem?&#10;A)-$20,000&#10;B)-$25,900&#10;C)$70,000&#10;D)$80,000

Accepted Answer

The answer of  &#10;The following questions use the information...

Question 43

A fast food restaurant is considering opening a new store at one of four locations. They have developed the following multi-criteria scoring model for this problem. What location should they choose based on this information?

A)A
B)B
C)C
D)D

Accepted Answer

The answer of A fast food restaurant is considering opening...

Question 44

&#10;A company is planning a plant expansion. They can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is an 69% chance that demand for their products will be high and a 31% chance that it will be low. The company can pay a market research firm to survey consumer attitudes towards the company's products. There is a 63% chance that the customers will like the products and a 37% chance that they won't. The payoff matrix and costs of the two plants are listed below. The company believes that if the survey is favorable there is a 92% chance that demand will be high for the products. If the survey is unfavorable there is only a 30% chance that the demand will be high. The following decision tree has been built for this problem. The company has computed that the expected monetary value of the best decision without sample information is 154.35 million. The company has developed the following conditional probability table for their decision problem.&#10;  &#10;&#10;-Refer to Exhibit 14.6. What formula should go in cell C13 of the probability table?&#10;A)=C5/$D4&#10;B)=C5/C$6&#10;C)=C5/$D5&#10;D)=C4/$D4

Accepted Answer

The answer of  &#10;A company is planning a plant...

Question 45

A company is planning a plant expansion. They can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is an 69% chance that demand for their products will be high and a 31% chance that it will be low. The company can pay a market research firm to survey consumer attitudes towards the company's products. There is a 63% chance that the customers will like the products and a 37% chance that they won't. The payoff matrix and costs of the two plants are listed below. The company believes that if the survey is favorable there is a 92% chance that demand will be high for the products. If the survey is unfavorable there is only a 30% chance that the demand will be high. The following decision tree has been built for this problem. The company has computed that the expected monetary value of the best decision without sample information is 154.35 million. The company has developed the following conditional probability table for their decision problem.

-Refer to Exhibit 14.6. What formula should go in cell C13 of the probability table?

A)=C5/$D4
B)=C5/C$6
C)=C5/$D5
D)=C4/$D4

Accepted Answer

The answer of A company is planning a plant expansion....

Question 46

&#10;An investor is considering 4 investments, A, B, C, D. 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 decision tree has been developed for the problem. The investor has estimated the probability of a declining economy at 40% and an expanding economy at 60%.  &#10;&#10;-Refer to Exhibit 14.5. How high can P(E) go before the investor's decision, based on expected monetary value criteria, changes?&#10;A)0.65&#10;B)0.70&#10;C)0.75&#10;D)0.80

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 47

&#10;A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.&#10;    &#10;&#10;-Refer to Exhibit 14.8. What formula should go in cell G11 and get copied to G12:G13 of the Price worksheet to compute the Consistency Measure?&#10;A)=MMULT(C4:E4,$F$11:$F$13)&#10;B)=SUMPRODUCT(C4:E4,$F$11:$F$13)/F11&#10;C)=MMULT(C4:E4,$F$11:$F$13)/F11&#10;D)=MMULT(C7:E7,$F$11:$F$13)/F11

Accepted Answer

The answer of  &#10;A company needs to buy a...

Question 48

&#10;The following questions use the information below.&#10;A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent between the two alternatives when p = 0.45.&#10;  &#10;&#10;-Refer to Exhibit 14.7. What is the expected value of Alternative 2 for this decision maker?&#10;A)$82,000&#10;B)$56,100&#10;C)$64,350&#10;D)$72,600

Accepted Answer

The answer of  &#10;The following questions use the information...

Question 49

The total worth, value or desirability of a decision alternative is called its&#10;A)usefulness.&#10;B)worthiness.&#10;C)utility.&#10;D)risk.

Accepted Answer

The answer of The total worth, value or desirability of...

Question 50

A &#34;risk averse&#34; decision maker assigns the ____ relative utility to any payoff but has a(n) ____ marginal utility for increased payoffs.&#10;A)largest; increasing&#10;B)largest; diminishing&#10;C)smallest; diminishing&#10;D)smallest; increasing

Accepted Answer

The answer of A &#34;risk averse&#34; decision maker assigns the...

Question 51

&#10;An investor is considering 4 investments, A, B, C, D. 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 decision tree has been developed for the problem. The investor has estimated the probability of a declining economy at 40% and an expanding economy at 60%.  &#10;&#10;-Refer to Exhibit 14.5. What is the expected monetary value for the investor's problem?&#10;A)32&#10;B)36&#10;C)38&#10;D)42

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 52

&#10;A company is planning a plant expansion. They can build a large or small plant. The payoffs for the plant depend on the level of consumer demand for the company's products. The company believes that there is an 69% chance that demand for their products will be high and a 31% chance that it will be low. The company can pay a market research firm to survey consumer attitudes towards the company's products. There is a 63% chance that the customers will like the products and a 37% chance that they won't. The payoff matrix and costs of the two plants are listed below. The company believes that if the survey is favorable there is a 92% chance that demand will be high for the products. If the survey is unfavorable there is only a 30% chance that the demand will be high. The following decision tree has been built for this problem. The company has computed that the expected monetary value of the best decision without sample information is 154.35 million. The company has developed the following conditional probability table for their decision problem.&#10;  &#10;&#10;-Refer to Exhibit 14.6. What is P( ), where F = favorable response and H = high demand?&#10;A).58&#10;B).63&#10;C).84&#10;D).92

Accepted Answer

The answer of  &#10;A company is planning a plant...

Question 53

&#10;A company needs to buy a new insurance policy. They have three policies to choose from, A, B and C. The policies differ with respect to price, coverage and ease of billing. The company has developed the following AHP tables for price and summary. The other tables are not shown due to space limitations.&#10;    &#10;&#10;-Refer to Exhibit 14.8. What formula should go in cell F11 and get copied to F12:F13 of the Price worksheet to compute the Price Score?&#10;A)=AVERAGE(C4:C6)&#10;B)=AVERAGE(C11:E11)&#10;C)=AVERAGE(G11:G13)&#10;D)=AVERAGE(C7:E7)

Accepted Answer

The answer of  &#10;A company needs to buy a...

Question 54

What is the formula for the weighted average score for alternative j when using a multi-criteria scoring model?&#10;A)&#10;B)&#10;C)&#10;D)

Accepted Answer

The answer of What is the formula for the weighted...

Question 55

What is the formula for the exponential utility function U(x)? A)-e^-^x/R B)1 + e^-^x/R C)1 - e^x/R D)1 - e1^-^x/R

Accepted Answer

The answer of What is the formula for the exponential...

Question 56

Based on the radar chart of raw scores provided below, why is this decision complex?  &#10;A)The chart is hard to read.&#10;B)No site wins on all four criteria.&#10;C)No site achieves a perfect score of 1.0 on a criteria.&#10;D)No sites have sufficient security.

Accepted Answer

The answer of Based on the radar chart of raw...

Question 57

&#10;The following questions use the information below.&#10;A decision maker is faced with two alternatives. The decision maker has determined that she is indifferent between the two alternatives when p = 0.45.&#10;  &#10;&#10;-Refer to Exhibit 14.7. What is the decision maker's certainty equivalent for this problem?&#10;A)-$15,000&#10;B)$82,000&#10;C)$56,100&#10;D)$82,000.

Accepted Answer

The answer of  &#10;The following questions use the information...

Question 58

The scores in a scoring model range from&#10;A)0 to 1&#10;B)-1 to +1&#10;C)0 to 5&#10;D)0 to 10

Accepted Answer

The answer of The scores in a scoring model range...

Question 59

Based on the radar chart of the weighted scores provided below, which of the following interpretations is incorrect?  &#10;A)Site A wins on the Sales criteria but is last on the Location criteria.&#10;B)Site C wins on the Security criteria and scores high on the remaining three criteria.&#10;C)Site B scores lowest on each of the four criteria.&#10;D)No site dominates on each of the four criteria.

Accepted Answer

The answer of Based on the radar chart of the...

Question 60

An investor is considering 2 investments, A, B, which can be made now. After these investments are made he can pursue choices C, D, E and F depending on whether he chose A or B originally. He has developed the following decision tree to aid in his selection process. What are the correct original and subsequent decisions based on an expected monetary value criteria?  &#10;A)A, C&#10;B)A, D&#10;C)B, E&#10;D)B, F

Accepted Answer

The answer of An investor is considering 2 investments, A,...

Question 61

&#10;An investor is considering 4 investments, W, X, Y, and Z. 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 80% and an expanding economy at 20%.&#10;  &#10;&#10;-Refer to Exhibit 14.10. Complete the table using the expected monetary value decision rule and indicate which decision should be made according to that rule.

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Question 62

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.

-Refer to Exhibit 14.2. What formula should go in cell F5 of the Regret Matrix above to compute the regret value?

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

Accepted Answer

The answer of An investor is considering 4 investments, A,...

Question 63

&#10;The following questions are based on the information below.&#10;An investor is considering 4 investments, W, X, Y, and Z. 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 investment decision problem.&#10;  &#10;&#10;-Refer to Exhibit 14.9. What formula should go in cell D5 and get copied to D6:D8 to implement the maximax decision rule?

Accepted Answer

The answer of  &#10;The following questions are based on...

Question 64

&#10;An investor is considering 4 investments, W, X, Y, and Z. 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 80% and an expanding economy at 20%.&#10;  &#10;&#10;-Refer to Exhibit 14.10. Complete the Regret Table according to the expected regret decision rule.

Accepted Answer

The answer of  &#10;An investor is considering 4 investments,...

Deck 14: Decision Analysis