Test_4 (1)

Test_4 (1) - EXCERCISE 4...

This preview shows pages 1–2. Sign up to view the full content.

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: EXCERCISE 4 Name___________________________________ MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question 1) The expected value is a measure of A) central tendency. B) uncertainty. C) risk. D) variability. 1) 2) Assume that one of two possible outcomes will follow a decision. One outcome yields a \$75 payoff and has a probability of 0.3; the other outcome has a \$125 payoff and has a probability of 0.7. In this case the expected value is A) \$110. B) \$60. C) \$35. D) \$85. 2) 3) An investment opportunity is a sure thing; it will pay off \$100 regardless of which of the three possible outcomes comes to pass. The variance of this investment opportunity: A) is 2. B) is 1. C) is - 1. D) is 0. E) cannot be determined without knowing the probabilities of each of the outcomes. 3) 4) Assume that two investment opportunities have identical expected values of \$100,000. Investment A has a variance of 25,000, while investment B's variance is 10,000. We would expect most...
View Full Document

This note was uploaded on 10/19/2010 for the course ECON 303 taught by Professor Cheng during the Fall '07 term at USC.

Page1 / 3

Test_4 (1) - EXCERCISE 4...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online