Exhibit 14.5 The Following Questions Are Based on the Information Below

question 58

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%.
-Suppose that the payoffs for an alternative with three states of nature are: 10, 20, and 30. The probabilities of these states of nature are 0.2, 0.3, and 0.5, respectively. The expected payoff for the alternative is equal to

• A) 23
• B) 30
• C) 60
• D) 20

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Definitions:

Job Rotation

A method of employee development where individuals are moved through a variety of positions to gain breadth of experience.

Reducing Boredom

The process or methods used to alleviate feelings of tedium or uninterest, especially in work or daily activities.

Job Enrichment

The process of making a job more rewarding, engaging, and satisfying by adding responsibilities and opportunities for growth.

Quality

The degree to which a product, service, or process meets specified standards or user expectations, often associated with excellence or superiority.