Assignment no.4 Cristel Cruz.xlsx - Cristel Cruz Dr Lopez...

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Cristel Cruz Dr. Lopez Quantitative Approach to Business Decisions February 18th, 2020 PROBLEM 3.16 does the utility curve for these types of decision makers differ?  What is a risk seeker? What is a risk avoider? How What is a risk seeker? What is a risk avoider?
How does the u of decis
utility curve for these types sion makers differ?
PROBLEM 3.18 is the principal owner of Brown Oil, his brother Bob is credited with making the company a financial success. Bob is vice president of finance. Bob attributes his success to his pessimistic attitude about business and the oil industry. Given the information from Problem 3-17, it is likely that Bob will arrive at a different decision. What decision criterion should Bob use, and what alternative will he select? EQUIPMENT FAVORABLE MARKET UNFAVORABLE MARKET Sub 100 $ 300,000.00 $ -200,000.00 Oil J $ 250,000.00 $ -100,000.00 Texan $ 75,000.00 $ -18,000.00  Although Ken Brown (discussed in Problem 3-17) Bob has been sucessful based on his pessimistic attitude. Based on this, Bob will use the maximin criterion decision. The maximin criterion is a pessimistic approach. Bob will select Texan because it is associated with the minimum loss of $18,000.
PROBLEM 3.20 money that he inherited. The following payoff table gives the profits that would be realized during the next year for each of three investment alternatives Mickey is considering: STATE OF NATURE DECISION ALTERNATIVE GOOD ECONOMY POOR ECONOMY Stock Market $ 80,000.00 $ -20,000.00 Bonds $ 30,000.00 $ 20,000.00 CDs $ 23,000.00 $ 23,000.00 Probability 0.5 0.5

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