When the Maximin Criterion Is Used, the Decision Maker Assumes

question 89

True/False

When the maximin criterion is used, the decision maker assumes that for any alternative action, the state of nature with the maximum payoff will take place.

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Definitions:

Required Rate Of Return

The minimum expected return on an investment necessary for an investor to consider it worthwhile.

Required Return

The expected yield that an investor anticipates receiving on an investment, taking into account the risk associated with it.

Profitability Index

A capital budgeting tool that measures the ratio between the present value of future cash flows from an investment and the initial investment cost.

After-tax Cash Flows

The net amount of cash that remains after all tax liabilities have been deducted from a company's revenues.