Heading: Analyzing Risky Decisions

question 64

Multiple Choice

Heading: Analyzing Risky Decisions
**Reference: Use the decision tree along with the given probabilities to answer the next six questions
Probability Event A = 30% Probability Event B = 70%
Probability Event 1 = 58% Probability Event 2 = 42%
Probability of Event A given that Event 1 occurs = 16%
Probability of Event B given that Event 1 occurs = 84%
Probability of Event A given that Event 2 occurs = 50%
Probability of Event B given that Event 2 occurs = 50%

-A decision tree is:

• A)a diagram that describes the options available to a decision marker as well as the certain events that can occur at each point in time.
• B)a diagram that helps the observer calculate the expected value, variance and standard deviation of a probability distribution.
• C)not applicable to making decisions under conditions of uncertainty.
• D)a diagram that describes the options available to a decision marker as well as the risky events that can occur at each point in time.

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Definitions:

Fixed Asset Value

The net value of a company's physical assets, like buildings and machinery, after accounting for depreciation or impairment.

Current Assets

Assets that are expected to be converted into cash, sold, or consumed within one year or within the business's normal operating cycle, whichever is longer.

Fixed Assets

Fixed assets, also known as non-current assets, are long-term physical assets used in the operations of a business.

Taxable Income

The portion of an individual's or corporation's income used as a basis for calculating the amount of income tax owed to the government.