244 the Expected Value of an Action

question 6

Multiple Choice

24.4 The Expected Value of an Action.Using the payoff table ($ million) is shown below, if the probabilities for future mortgage interest rates going up, staying about the same, and going down are .35, .50 and .15, respectively, what is the expected value for building an active retirement community?

• A)$2.5 million
• B)$3.625 million
• C)$2.75 million
• D)$875,000
• E)None of the above

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Definitions:

Course of Performance

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A violation of a guarantee or promise made about the quality or durability of a product or service.

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