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# Ch15 - Ch15 Student 1 A probability distribution A is a way...

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Ch15 Student: ___________________________________________________________________________ 1. A probability distribution A. is a way of dealing with uncertainty. B. lists all possible outcomes and the corresponding probabilities of occurrence. C. shows only the most likely outcome in an uncertain situation. D. both a and b E. both a and c 2. The variance of a probability distribution is used to measure risk because a higher variance is associated with 3. Risk exists when A. all possible outcomes are known but probabilities can't be assigned to the outcomes. B. all possible outcomes are known and probabilities can be assigned to each. C. all possible outcomes are known but only objective probabilities can be assigned to each. D. future events can influence the payoffs but the decision maker has some control over their probabilities. E. c and d 4. When a manager can list all outcomes and assign probabilities to each 5. Subjective probabilities are 6. Choosing the decision with the maximum possible payoff A. is the maximax rule. B. ignores possible bad outcomes. C. is a guide for decision making under uncertainty. D. all of the above E. none of the above

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7. The maximin rule 8. Using the minimax regret rule the manager makes the decision 9. In making decisions under risk The next 7 questions refer to the following: A firm is considering two projects, A and B , with the following probability distributions for profit.
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