Decision Criteria

You have available five different investment strategies and their respective payoffs for various states-of-nature as shown in the chart below. Which investment would you make under the different decision criteria?

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 Ą = 0.6)
Answer:Investment
e)Minimax regret criteria
Answer:Investment
f)Criterion of maximum expected value
Answer:Investment

  1. 👍 0
  2. 👎 0
  3. 👁 244
  1. Assistance needed.

    Please type your subject in the School Subject box. Any other words, such as what you typed, are likely to delay responses from a teacher who knows that subject well.

    1. 👍 0
    2. 👎 0
    👩‍🏫
    Writeacher

Respond to this Question

First Name

Your Response

Similar Questions

  1. History

    According to Laozi, what is the Dao? A.the home of the heavenly spirits B.respect for authority C.the natural way of the universe D.reverence for ancestors What is the main topic discussed in the Analects of Confucius? A.proper

  2. Algebra

    A financier plans to invest up to $500,000 in two projects. Project A yields a return of 11% on the investment of x dollars, whereas Project B yields a return of 16% on the investment of y dollars. Because the investment in

  3. English

    A) What are the methods for structuring and presenting information called? A. organizational strategies b. research facts and data c. classification strategies d. narratives and arguments Answer 1. organizational strategies

  4. Social Studies

    -Which of the following excerpts from Article I of the Constitution reflects the results of the Great Compromise? A)"Representatives and direct Taxes shall be apportioned among the several States which may be included within this

  1. Algebra

    an investment of 72,000 was made by a business club. the investment was split into three parts and lasted for one year. the first part of the investment earned 8% interest. the second 6% and the third 9%. total interest from the

  2. English

    What are the methods for structuring and presenting information called? 1.organizational strategies 2.research, facts, and data 3.classification strategies 4.narratives and arguments

  3. word problem

    An investment of $93,000 was made by a business club. the investment was split into three parts and lasted for one year. The first part of the investment earned 8% interest, the second earned 6% and the third 9%. total interest

  4. Precalc

    An investment of $37,000 was made by a business club. The investment was split into three parts and lasted for one year. The first part of the investment earned 8% interest, the second 6%, and the the third 9%. Total interest from

  1. history

    the building of the Panama Canal was important because it a. helped stabilize the economies of Latin American countries b. improved relations between Colombia and the United States c. facilitated movement between Atlantic and

  2. child development

    Which of the following is correct about learning strategies in childhood ? A.most children spontaneously master learning strategies b.children can taught how to use strategies effectively. C.stratees for effective learning and

  3. Government

    When James Madison wrote in the Federalist Papers, "What is government itself, but the greatest of all reflections on human nature?" what was he saying about human nature? a. that the type of government shows a lot about human

  4. ALGEBRA

    Assume that a dart is randomly thrown at the dartboard shown here and strikes the board every time. The payoffs are listed on the board. How much should you be willing to pay for the opportunity to play this game? (Give your

You can view more similar questions or ask a new question.