Exhibit 14.5 The Following Questions Are Based on the Information Below

question 98

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%.
-The decision with the smallest expected opportunity loss (EOL) will also have the

• A) smallest EMV.
• B) largest EMV.
• C) smallest regret.
• D) largest regret.

---

Definitions:

Monorchism

A medical condition where an individual has only one functioning testicle.

Hypospadias

A congenital condition in males where the opening of the urethra is not located at the tip of the penis.

Bladder Exstrophy

A rare congenital condition where the bladder and parts of the urinary tract are exposed outside the body.