Which of the Following Statement Is FALSE About the Expected

question 64

Multiple Choice

Which of the following statement is FALSE about the expected value approach to make decisions under risk?

• A)It assumes that the decision maker is rational and will choose the optimum decision with the highest expected value.
• B)It ignores the elements other than monetary profits.
• C)It takes irrational factors into consideration.
• D)It ignores factors such as quality of life or the current monetary status of the decision maker.

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Definitions:

Operating Cash Flow

A metric reflecting the cash flow from a company's core operations.

Net Income

Net income is the total earnings of a company after all expenses and taxes have been subtracted from revenues, representing the profit during a specific period.

Depreciation

Allocation of the cost of an asset over its useful life, recognizing the reduction in value due to wear and use.

Bid Price

The price at which a buyer is willing to purchase a security, currency, or commodity.