Which of the Following Statements Is Likely to Be Correct

question 31

Multiple Choice

Which of the following statements is likely to be correct for a decision tree which indicates a 30 percent chance of making a $250,000 profit and a 70 percent chance of sustaining a $140,000 loss?

• A)the decision should be "yes" whenever the amount of possible profit exceeds the amount of possible loss.
• B)the decision should be "no" whenever there is a possibility of loss.
• C)the expected value is positive before discounting.
• D)the expected value is negative before discounting.

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Definitions:

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