SME_8e_Ch_22_Section_2 - CHAPTER 22 SECTION 2: DECISION...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
1 CHAPTER 22 SECTION 2: DECISION ANALYSIS MULTIPLE CHOICE 63. Which of the following statements is correct? a. The EMV criterion selects the act with the largest expected monetary value. b. The EOL criterion selects the act with the smallest expected opportunity loss. c. The expected value of perfect information (EVPI) equals the smallest expected opportunity loss. d. All of these choices are true. ANS: D PTS: 1 REF: SECTION 22.2 64. The expected value of perfect information is the same as the: a. expected monetary value for the best alternative. b. expected monetary value for worst alternative. c. expected opportunity loss for the best alternative. d. expected opportunity loss for the worst alternative. ANS: C PTS: 1 REF: SECTION 22.2 65. The expected value of sample information (EVSI) is the difference between: a. the posterior probabilities and the prior probabilities of the states of nature. b. the expected payoff with perfect information (EPPI) and the expected monetary value for the best decision (EMV * ). c. the expected monetary value with additional information (EMV') and the expected monetary value for the best decision (EMV * ). d. the expected value of perfect information (EVPI) and the smallest expected opportunity loss (EOL * ). ANS: C PTS: 1 REF: SECTION 22.2 66. The procedure for revising probabilities based upon additional information is referred to as: a. utility theory. b. Bernoulli's theorem. c. central limit theorem. d. Bayes Law. ANS: D PTS: 1 REF: SECTION 22.2 67. The difference between expected payoff under certainty and expected value of the best act without certainty is the: a. expected monetary value. b. expected net present value. c. expected value of perfect information. d. expected rate of return. ANS: C PTS: 1 REF: SECTION 22.2
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 68. The minimum expected opportunity loss is also equal to the: a. expected profit under certainty. b. expected value of perfect information. c. coefficient of variation. d. expected value under certainty minus the expected monetary value of the worst alternative. ANS: B PTS: 1 REF: SECTION 22.2 69. Which of the following statements is correct? a. The expected value of perfect information (EVPI) equals the largest expected monetary value (EMV * ). b. The expected value of perfect information (EVPI) equals the smallest expected opportunity loss (EOL * ). c. The expected value of perfect information (EVPI) equals the expected payoff with perfect information (EPPI). d. All of these choices are true ANS: B PTS: 1 REF: SECTION 22.2 TRUE/FALSE 70. Removal of uncertainty from a decision-making problem leads to a case referred to as perfect information. ANS: T PTS: 1 REF: SECTION 22.2 71. The preposterior analysis determines whether or not sample information should be purchased to revise the prior probabilities associated with the states of nature. ANS: T
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 09/28/2010 for the course FINOPMGT 250 taught by Professor Kumar during the Spring '10 term at University of Massachusetts Boston.

Page1 / 15

SME_8e_Ch_22_Section_2 - CHAPTER 22 SECTION 2: DECISION...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online