A Decision Maker's Worst Option Has an Expected Value of $2,550

question 112

Multiple Choice

A decision maker's worst option has an expected value of $2,550, and the decision maker's best option has an expected value of $4,750. With perfect information, the expected value would be $6,000. The decision maker has received an offer from a banking firm that will make their position risk-free for a fee of $600. How much better off will the decision maker be if they take the offer?

• A)$2,200
• B)$4,250
• C)$3,450
• D)$1,250
• E)$650

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Definitions:

Consumer Group

A collection of individuals or households that share similar purchasing behaviors or characteristics.

Z-scores

Standardized scores that indicate how many standard deviations an element is from the mean, used in statistics for comparisons between different data sets.

P-values

The probability under a specified statistical model that a statistical summary of the data would be equal to or more extreme than its observed value.

Sick Leave

Authorized absence from work granted to employees who are unable to work due to illness, with policies varying by employer.