Basic Business Statistics, Student Value Edition (13th Edition)
Basic Business Statistics, Student Value Edition (13th Edition)
13th Edition
ISBN: 9780321946393
Author: Mark L. Berenson, David M. Levine, Kathryn A. Szabat
Publisher: PEARSON
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Chapter 20, Problem 14PS

a.

To determine

Decide the optimal action based on the maximax criterion.

b.

To determine

Decide the optimal action based on the Maximin criterion.

c.

To determine

Find the expected monetary value for each action.

d.

To determine

Find the expected opportunity loss for each action.

e.

To determine

Explain the meaning of the expected value of perfect information for this problem.

f.

To determine

Explain the reason for selecting either of the action from the results of parts (c) and (d).

g.

To determine

Find the coefficient of variation for each action.

h.

To determine

Find the return-to-risk ratio (RTRR) for each action.

i.

To determine

Explain the reason for selecting either of the action from the results of parts (g) and (h).

j.

To determine

Compare the results of parts (f) and (i) and explain any difference.

k.

To determine

Find the expected monetary value for each investment alternative when the probabilities of the different economic conditions are as given below.

0.1, 0.6 and 0.3

0.1, 0.3 and 0.6

0.4, 0.4 and 0.2

0.6, 0.3 and 0.1

To determine

Find the expected opportunity loss for each investment alternative when the probabilities of economic conditions are as given below.

0.1, 0.6 and 0.3

0.1, 0.3 and 0.6

0.4, 0.4 and 0.2

0.6, 0.3 and 0.1

To determine

Explain the meaning of the expected value of perfect information for this problem when the probabilities of each investment are as given below.

0.1,0.6 and 0.3

0.1,0.3 and 0.6

0.4,0.4 and 0.2

0.6,0.3 and 0.1

To determine

Explain the reason for selecting the investment from the results of parts (c) and (d) when the probabilities of each investment are as given below.

0.1, 0.6, and 0.3

0.1, 0.3, and 0.6

0.4, 0.4, and 0.2

0.6, 0.3, and 0.1

To determine

Find the coefficient of variation for each investment when the probabilities of different economic conditions are as given below.

0.1, 0.6, and 0.3

0.1, 0.3, and 0.6

0.4, 0.4, and 0.2

0.6, 0.3, and 0.1

To determine

Find the return-to-risk ratio (RTRR) for each investment when the probabilities of different economic conditions are:

0.1, 0.6, and 0.3

0.1, 0.3, and 0.6

0.4, 0.4, and 0.2

0.6, 0.3, and 0.1

To determine

Explain the reason for selecting the investment from the results of coefficient of variation and RTRR when the probabilities of different economic conditions are:

0.1, 0.6, and 0.3

0.1, 0.3, and 0.6

0.4, 0.4, and 0.2

0.6, 0.3, and 0.1

To determine

Compare the results of parts (f) and (i) and explain the difference when the probabilities of different economic conditions are:

0.1, 0.6, and 0.3

0.1, 0.3, and 0.6

0.4, 0.4, and 0.2

0.6, 0.3, and 0.1

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Chapter 20 Solutions

Basic Business Statistics, Student Value Edition (13th Edition)

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