TABLE 17-6
a Student Wanted to Find Out the Optimal

question 90

True/False

TABLE 17-6
A student wanted to find out the optimal strategy to study for a Business Statistics exam. He constructed the following payoff table based on the average amount of time he needed to put in every week studying for the course and the degree of difficulty of the exam. From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy.
$$\begin{array} { | l | c | c | c | } \hline & \text { 16 hours } & 8 \text { hours } & \text { 4 hours } \\\hline \text { Easy Exam } & 40 & 60 & 80 \\\hline \text { Difficult Exam } & 100 & 50 & 0 \\\hline\end{array}$$
-Referring to Table 17-6, the optimal strategy using the maximin criterion is to study 16 hours per week on average for the exam.

---

Definitions:

Closed-End Mutual Funds

Investment funds with a fixed number of shares that are traded on stock exchanges, unlike open-end funds which do not have a fixed number of shares.

NAV

Net Asset Value, representing the per-share/unit price of a fund on a specific date or time.

Redeem Shares

The process of exchanging fund shares for cash or equivalent value, typically executed according to the terms set by the issuing company or fund.

Actively-Managed Mutual Funds

Mutual funds managed by professionals who actively select investments in an effort to outperform the market.