# Expected value is the sum of the weighted payoff possibilities at a circular node in a decision tree.

July 30, 2019
###### Which of the following is not a money market instrument?
July 30, 2019

Review Test Submission: Quiz3

Content

Course QMBLC Summer14
Test Quiz3

• Question 1

A payoff table is given below and the probabilities of s1, s2, and s3 are .2, .5, and .3, respectively, then what is the most you pay for a highly reliable forecast?
s1 s2 s3
d1 250 750 500
d2 300 -250 1200
d3 500 500 600

• Question 2

Expected value is the sum of the weighted payoff possibilities at a circular node in a decision tree.

• Question 3

A payoff table is given as; what choice should be made by the conservative decision maker?
s1 s2 s3
d1 250 750 500
d2 300 -250 1200
d3 500 500 600

• Question 4

For the payoff table below, the decision maker will use P(s1) = .15, P(s2) = .5, and P(s3) = .35.
What is the expected value for the best decision?

State of Nature
Decision s1 s2 s3
d1   -5,000  1,000 10,000
d2 -15,000 -2,000 40,000

• Question 5

If the probability of s1 is .40 what is the value at node 11.

• Question 6

Given the following table of payoffs use sensitivity analysis to determine at what probability or less you would select decision A?
Decision Event1 Event 2
A 0 20
B 6 16
C 8 0

• Question 7

Given the following table of payoffs use sensitivity analysis to determine at what probability or more you would select decision C?
Decision Event1 Event 2
A 0 20
B 6 16
C 8 0

• Question 8

If the probability of s1 = .6 and the probability of F = .40 what is the value at node 4.

• Question 9

The following is a payoff table giving profits for various situations.

What decision would an optimist make?

• Question 10

The following is a payoff table.

What decision should be made based on the minimax regret criterion?