A firm is considering two projects,A and B,with the following probability distributions for profit. $$\begin{array} { c c c }
\begin{array} { c }
\text { Prafit } \
\text { (\$1,000s) }
\end{array} & \begin{array} { c }
\text { Praject } A \
\text { Prabability } ( \% )
\end{array} & \begin{array} { c }
\text { Project } B \
\text { Prabability } ( \% )
\end{array} \
\hline \$ 20 & 10 & 10 \
40 & 15 & 15 \
60 & 50 & 25 \
80 & 15 & 40 \
100 & 10 & 10
\end{array}$$ Given the above,a decision maker using the coefficient of variation rule would
A)choose project A.
B)choose project A only if risk averse.
C)choose project B.
D)choose project B only if risk loving.
E)not be able to make a decision using that rule.

Question

A firm is considering two projects,A and B,with the following probability distributions for profit. $$\begin{array} { c c c } 
\begin{array} { c } 
\text { Prafit } \
\text { (\$1,000s) }
\end{array} & \begin{array} { c } 
\text { Praject } A \
\text { Prabability } ( \% )
\end{array} & \begin{array} { c } 
\text { Project } B \
\text { Prabability } ( \% )
\end{array} \
\hline \$ 20 & 10 & 10 \
40 & 15 & 15 \
60 & 50 & 25 \
80 & 15 & 40 \
100 & 10 & 10
\end{array}$$ Given the above,a decision maker using the coefficient of variation rule would
A)choose project A.
B)choose project A only if risk averse.
C)choose project B.
D)choose project B only if risk loving.
E)not be able to make a decision using that rule.

Quizplus · Accepted Answer

The Answer of A firm is considering two projects,A and B,with the following probability distributions for profit. $$\begin{array} { c c c } 
\begin{array} { c } 
\text { Prafit } \
\text { (\$1,000s) }
\end{array} & \begin{array} { c } 
\text { Praject } A \
\text { Prabability } ( \% )
\end{array} & \begin{array} { c } 
\text { Project } B \
\text { Prabability } ( \% )
\end{array} \
\hline \$ 20 & 10 & 10 \
40 & 15 & 15 \
60 & 50 & 25 \
80 & 15 & 40 \
100 & 10 & 10
\end{array}$$ Given the above,a decision maker using the coefficient of variation rule would
A)choose project A.
B)choose project A only if risk averse.
C)choose project B.
D)choose project B only if risk loving.
E)not be able to make a decision using that rule.

A Firm Is Considering Two Projects,A and B,with the Following