Instruction 17-3
the Following Payoff Table Shows Profits Associated with a Set

question 27

Multiple Choice

Instruction 17-3
The following payoff table shows profits associated with a set of three alternatives under two possible events.
$$\begin{array} { c c c c } \text { States } & A 1 & A 2 & A B \\\hline 1 & 12 & - 2 & 8 \\2 & 4 & 10 & 5\end{array}$$ where:
S1 is event 1
A1 is action alternative 1
S2 is event 2
A2 is action alternative 2
A3 is action alternative 3
-Referring to Instruction 17-3,if the probability of S1 is 0.5,then the coefficient of variation for A2 is _______.

• A) 0.231
• B) 2
• C) 1.5
• D) 0.5

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Definitions:

Average Squared Difference

A statistical measure used in variance calculations, representing the average of the squared differences from the mean.

Actual Return

The real profit or loss achieved on an investment over a particular time period, often expressed as a percentage.

Risk-free Return

The theoretical return on an investment with zero risk of financial loss, typically associated with government bonds.

Treasury Bills

Short-term government securities issued at a discount from the face value and maturing at par, used as a tool for managing liquidity and financing government debt.