Exhibit 14.5 The Following Questions Are Based on the Information Below

question 73

Multiple Choice

Exhibit 14.5
The following questions are based on the information below.
An investor is considering 4 investments, A, B, C, D. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following decision tree has been developed for the problem. The investor has estimated the probability of a declining economy at 40% and an expanding economy at 60%.
-Which decision rule pessimistically assumes that nature will always be "against us" regardless of what decision we make?

• A) maximax decision rule.
• B) maximin decision rule.
• C) minimax regret decision rule.
• D) minimin decision rule.

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Definitions:

ON Condition

A state where a circuit is complete, allowing current to flow, or a logical condition that has been met.

PLC Programming Languages

Languages developed to create programs for Programmable Logic Controllers, including Ladder Diagram, Function Block Diagram, and Structured Text.

Graphical Language

A visual programming language where the user creates programs by manipulating graphical elements rather than writing textual code.

Function Block Diagram

A graphical programming language used in PLCs and other control systems, representing functions between input and output.