Refer to the Following:
a Firm Is Considering Two Projects

question 9

Multiple Choice

Refer to the following:
A firm is considering two projects, A and B, with the following probability distributions for profit.
$$\begin{array} { c c c } \begin{array} { c } \text { Profit } \\\text { (\$1,000s) }\end{array} & \begin{array} { c } \text { Praject } A \\\text { Probability } ( \% ) \end{array} & \begin{array} { c } \text { Project B} \\\text { Prabability (\%) }\end{array} \\\hline \$ 20 & 10 & 10 \\40 & 15 & 15 \\{ 5 0 } & 50 & { 2 5 } \\{ 8 0 } & 15 & 40 \\100 & 10 & 10\end{array}$$
-A decision maker using the analysis of variance rule would

• A) choose project A.
• B) choose project A only if risk averse.
• C) choose project B.
• D) choose project B only if risk loving.
• E) not be able to make a decision using that rule.

---

Definitions:

Correlation Coefficient

A statistical measure that indicates the extent to which two variables fluctuate together, showing the strength and direction of their relationship.

Everyday Environment

The typical and familiar setting or context in which a person spends their daily life, encompassing home, work, school, and social spaces.

Diagnostic Labels

Terms used by healthcare professionals to categorize and describe mental health and medical conditions based on symptoms and characteristics.

Ethical Factors

Considerations related to principles of right and wrong behavior, often guiding decision-making processes in professional and personal contexts.