TABLE 17-2
the Following Payoff Matrix Is Given in Dollars $\quad$

question 74

Multiple Choice

TABLE 17-2
The following payoff matrix is given in dollars.

$\quad$ $\quad$ $\quad$ $\quad$ $\text {Action }$
$\begin{array} { c c c } \text { Event }& A & B \\\hline1 & 400 & 700 \\2 & 200 & 500\end{array}$
Suppose the probability of Event 1 is 0.5 and Event 2 is 0.5.
-Referring to Table 17-2, what is the EMV for Action A?

• A) $600
• B) $700
• C) $300
• D) $550

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Definitions:

Defaulted Note

A note or loan for which the borrower has failed to make the agreed-upon payments by the due date.

Account

An accounting device used in bookkeeping to record increases and decreases of business transactions relating to individual assets, liabilities, capital, withdrawals, revenue, expenses, and so on.

Discounting Note Receivable

The process of reducing the value of a note receivable to reflect its current worth by applying an interest rate.

Endorsing Note

A legal act of signing the back of a negotiable instrument, such as a check, to assign its benefits to another party.