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

question 5

Short Answer

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, what is the opportunity loss of spending 8 hours per week on average studying for the exam when the exam turns out to be difficult?

---

Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, a key indicator of the company's financial health and profitability.

Financial Statements

Documents presenting a summary of a firm's financial status, encompassing the balance sheet, income statement, and cash flow statement.

Book Value

The value of an asset as it appears on a balance sheet, calculated by subtracting any depreciation, amortization, or impairment costs from its original cost.

Fair Value

The estimated market value of an asset or liability based on current market conditions.