You want to purchase bonds from a bank that offers high interest.However,you know that the bank's profitability has declined in recent times.Which of the following would you choose to help you make the best possible decision under these circumstances?
A) the dominance principle
B) the expected value principle
C) the elimination technique
D) the random choice decision making

Question

Quizplus · Accepted Answer

The expected value principle involves analyzing the potential outcomes and their probabilities to determine the expected value, which can then be used to compare options and make the best decision. In this scenario, using the expected value principle would involve assessing the potential return on investment from purchasing bonds at the high-interest bank, weighing it against the potential risk of the bank's declining profitability, and determining whether the expected return justifies the risk. This approach allows for a more informed decision-making process than the other options, which do not provide a structured method for analyzing potential outcomes.

You Want to Purchase Bonds from a Bank That Offers