Which of the following is a feature of the expected-value standard?
A) It helps the decision taker to choose the course of action that involves the maximum risk and return.
B) It cannot be employed in situations involving multiple and related risks.
C) It is employed for short-term, one-time decisions involving high risks.
D) The expected value of a risky prospect represents the average monetary outcome if it were repeated indefinitely.
E) The expected-value standard is appropriate for playing short-run averages.

Question

Quizplus · Accepted Answer

The expected-value standard is based on the idea that the value of a risky prospect is the weighted average of its potential outcomes, where the weights are the probabilities of the outcomes occurring. This standard is used to make decisions in situations where the outcomes are uncertain and involve risk. The expected value of a risky prospect represents the average monetary outcome if it were repeated indefinitely. Therefore, option D is the correct choice. options A, B, C, and E are not features of the expected-value standard.

Which of the Following Is a Feature of the Expected-Value