Instruction 17-6
a Student Wanted to Find Out the Optimal

question 66

True/False

Instruction 17-6
A student wanted to find out the optimal strategy to study for a Business Statistics exam. He constructed the following payoff table based on the mean amount of time he needed to put in every week studying for the course and the degree of difficulty of the exam. From the information that he gathered from students who had taken the course, he concluded that there was a 40% probability that the exam would be easy.
$$\begin{array} { | l | l | l | l | } \hline & 16 \text { hours } & 8 \text { hours } & 4 \text { hours } \\\hline \text { Easy Exam } & 40 & 60 & 80 \\\hline \text { Difficult Exam } & 100 & 50 & 0 \\\hline\end{array}$$
-Referring to Instruction 17-6,the optimal strategy using the expected opportunity loss (EOL)criterion is to study 16 hours per week on average for the exam.

---

Definitions:

Federal Government

The national government of a federal state, which holds authority over matters that affect the country as a whole, distinct from state or local governments.

Investment

The allocation of resources, typically money, in the expectation of generating an income or profit.

Commercial Banking

A banking sector that provides services to individuals and businesses, including loans, deposits, and payment services.

Toxic Mortgage Securities

Financial instruments derived from bundles of mortgages that are at high risk of default, contributing to financial crises when their value collapses.