Consider the Following Payoff Table with Amounts in $ Millions

question 39

Multiple Choice

Consider the following payoff table with amounts in $ millions. The column with investments lists mutually exclusive investment decisions.If you use the expected value criterion and you choose investment d₂,then the probability that you assign to the state of nature S₁ is __________.

• A)more than 0.25 and less than 0.67
• B)more than 0.33 and less than 0.67
• C)more than 0.25 and less than 0.5
• D)more than 0.33 and less than 0.5

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Definitions:

Note

A note is a brief record of facts, topics, or thoughts, written down as an aid to memory.

Dishonored

A term often used in finance to describe the refusal of a bank to pay a check or draft presented against insufficient funds.

Payable

Refers to an amount of money that must be paid, typically in the context of bills or debts.

Insurance Agent

a professional who sells, solicits, or negotiates insurance policies on behalf of an insurance company to clients.