Exhibit 14.5 The Following Questions Are Based on the Information Below

question 32

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%.
-A square node in a decision tree is called a(n) ____ node.

• A) chance
• B) random
• C) decision
• D) event

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Definitions:

Memory Storage

The process of retaining information over time through the encoding, consolidation, and retrieval of memories.

Several Seconds

A very short units of time, typically under a minute, consisting of multiple second increments.

Three-part Model

A conceptual framework divided into three sections or components for analysis or understanding.

Memory Storage

The process of retaining information over time through various forms of brain encoding and organization.