(A) Construct a Decision Tree to Help Her Model Her

question 98

Essay

(A) Construct a decision tree to help her model her option decision making. Make sure to label all decision and chance nodes and include appropriate costs, payoffs and probabilities.
(B) What is the optimal decision making policy regarding the options in all possible scenarios over the next two years?
(C) What is the expected value of the stock options? Ignore the time value of money (assume no discounting of future payoffs)
(D) If her estimates of the increases/decreases or probabilities are inaccurate, could the options have a negative EMV?

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Definitions:

Income Inequality

A measure of the uneven distribution of income within a population.

Average Income

The sum of all incomes divided by the number of income recipients.

United States

A country located in North America, comprising 50 states and known for its significant economic and political influence globally.

Population B

A term that could specify a second or particular subgroup within a larger population for study or analysis.