COP4355 quiz 28 - Exploration Company $400K $ 50K...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Solutions Manual and Workbook 263 Chapter 15 Quiz 15.1 Debbie Johnson has inherited a sizeable estate, which had been held in trust until she married. Having at last tied the knot and received the inheritance, she wishes to invest it so that she and her new husband, Larry, can quit their jobs and join the jet set in Puerta Vallarta, Cozumel, etc. She is considering three investments, and the annual return will vary, depending upon the price of oil and gas. The annual profits from the three investments are as shown below. High Oil & Low Oil & Gas Prices Gas Prices ________________________________________________
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Exploration Company $400K $ 50K Production Company $250K $150K Tax Free Bonds $200K $200K _________________________________________________ What are Debbie’s decision values and optimal choices under each of the following criteria? (a) Optimism Choose____________ Value____________ (b) Pessimism Choose____________ Value____________ (c) Hurwicz ( α = .6) Choose____________ Value_____________ (d) Savage Choose____________ Value_____________ (e) LaPlace & MAX EV (Profit) Choose____________ Value_____________ (f) LaPlace & MIN EVC (Regret) Choose____________ Value_____________...
View Full Document

This note was uploaded on 11/13/2011 for the course COP 4355 taught by Professor Koslov during the Spring '10 term at University of Florida.

Ask a homework question - tutors are online