Scenario 5.2: Randy and Samantha Are Shopping for New Cars (One Each)

question 65

Multiple Choice

Scenario 5.2:
Randy and Samantha are shopping for new cars (one each) . Randy expects to pay $15,000 with 1/5 probability and $20,000 with 4/5 probability. Samantha expects to pay $12,000 with 1/4 probability and $20,000 with 3/4 probability.
-Refer to Scenario 5.2. Which of the following is true?

• A) Randy has a higher expected expense than Samantha for the car.
• B) Randy has a lower expected expense than Samantha for the car.
• C) Randy and Samantha have the same expected expense for the car, and it is somewhat less than $20,000.
• D) Randy and Samantha have the same expected expense for the car: $20,000.
• E) It is not possible to calculate the expected expense for the car until the true probabilities are known.

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Definitions:

Policies

Formal guidelines or principles that govern actions and decisions within organizations or systems.

Independent

A term used to describe two or more events that have no influence on each other's outcomes, or variables that do not show dependence.

Random Variable

A variable linked to the numerical results derived from unpredictable events.

Exchange Rate

The exchange rate is the value of one currency for the purpose of conversion to another, dictating how much one currency is worth in terms of another.