A Project with the Chance for a Big Payout May

question 54

Multiple Choice

A project with the chance for a big payout may be funded if an important criterion is:

• A)cost.
• B)opportunity.
• C)top management pressure.
• D)risk.

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Definitions:

Total Utility

The complete contentment derived from the consumption of a specific amount of a product or service.

Fair Bet

A gamble where the expected value of the potential outcomes is equal, implying that there is no net advantage or disadvantage to participating.

Zero Sum Game

A situation in game theory in which one participant's gains result exactly from losses incurred by other participants.

Expected Value

A calculated average of all possible values in a given probability distribution, weighted by the likelihood of each outcome.