You Are a Hotel Manager and You Are Considering Four

question 57

Multiple Choice

You are a hotel manager and you are considering four projects that yield different payoffs,depending upon whether there is an economic boom or a recession.The potential payoffs and corresponding payoffs are summarized in the following table. $$\begin{array} { | l | l | l | } \hline \text { Praject } & \begin{array} { l } \text { Bamn } \\( 50 \% ) \end{array} & \begin{array} { l } \text { Recession } \\( 50 \% ) \end{array} \\\hline \text { A } & \$ 20 & - \$ 10 \\\hline \text { B } & - \$ 10 & \$ 20 \\\hline \text { C } & \$ 30 & - \$ 30 \\\hline \text { D } & \$ 50 & \$ 50 \\\hline\end{array}$$ Which project yields the greatest return,regardless of whether a boom or a recession occurs?

• A) A
• B) B
• C) C
• D) D

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Definitions:

P-value

The probability of observing a test statistic as extreme as, or more extreme than, the value observed under the assumption that the null hypothesis is true.

Sampling Variation

The variability in sample statistics from sample to sample due to randomness.

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