You are a hotel manager considering four projects that yield different payoffs,depending upon whether there is an economic boom or a recession.The potential payoffs and corresponding payoffs are summarized in the following table. $$\begin{array} { | l | l | l | }
\hline \text { Praject } & \begin{array} { l }
\text { Bamn } \
( 50 \% )
\end{array} & \begin{array} { l }
\text { Recession } \
( 50 \% )
\end{array} \
\hline \text { A } & \$ 40 & - \$ 20 \
\hline \text { B } & - \$ 10 & \$ 30 \
\hline \text { C } & \$ 50 & - \$ 50 \
\hline \text { D } & \$ 60 & \$ 60 \
\hline
\end{array}$$ Which of the following statements is true?

Question

You are a hotel manager considering four projects that yield different payoffs,depending upon whether there is an economic boom or a recession.The potential payoffs and corresponding payoffs are summarized in the following table. $$\begin{array} { | l | l | l | } 
\hline \text { Praject } & \begin{array} { l } 
\text { Bamn } \
( 50 \% )
\end{array} & \begin{array} { l } 
\text { Recession } \
( 50 \% )
\end{array} \
\hline \text { A } & \$ 40 & - \$ 20 \
\hline \text { B } & - \$ 10 & \$ 30 \
\hline \text { C } & \$ 50 & - \$ 50 \
\hline \text { D } & \$ 60 & \$ 60 \
\hline
\end{array}$$ Which of the following statements is true?

Quizplus · Accepted Answer

A risk-neutral manager evaluates projects based on their expected value, a risk-averse manager prefers projects with less uncertainty and potential for loss, and a risk-loving manager enjoys projects with high variability and potential for high returns. Project D offers the highest and most stable returns in both scenarios, making it the preferred choice for all three types of managers.

You Are a Hotel Manager Considering Four Projects That Yield