Wednesday

January 28, 2015

January 28, 2015

Posted by **Deana** on Sunday, September 25, 2011 at 12:22pm.

States of Nature

Sever

Decline Moderate Decline Stable Moderate Advance Strong Advance

T-Bills 3.50 3.50 3.50 3.50 3.50

Paragon (22.50) (2.00) 20.00 35.00 50.00

Luster 28.00 14.70 0.00 (10.00) (20.00)

Apex 10.00 5.00 7.00 45.00 30.00

Market (13.00) 5.00 22.00 38.00 Portfolio 47.00

Probability 0.05 0.35 0.30 0.20 0.10

Note: For the following questions, ¡§Investment¡¨ is the name of the strategy not the number, i.e., Luster, Apex, etc.

a)Maximin criteria

Answer: Investment

b)Maximax criteria

Answer:Investment

c)Equally Likely criteria

Answer:Investment

d)Criterion of realism (assume ƒÑ = 0.6)

Answer:Investment

e)Minimax regret criteria

Answer:Investment

f)Criterion of maximum expected value

Answer:Investment

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