Solution Question 4.8 & 4.9

Solution Question 4.8 & 4.9 - Strategy 3...

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A B A 1 A 2 (0.50) (0.50) (0.55) (0.45) (0.73) (0.27) $8 $0 $15 $4 $10 $0 PROFIT EMV = $7.5 EMV = $8 EMV = $4.5 EMV = 0.27*$8+0.73*$4=$5.08 EMV = $5.08 QUESTION 4.8
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B (0.55) (0.45) $10 $0 PROFIT QUESTION 4.9 Strategy 1 Pr(Profit=$10)=0.45 Pr(Profit=$ 0)=0.55 Pr(Profit $ 0)=0.55 Pr(Profit $10)=1.00
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A A 1 (0.73) (0.27) $8 $4 PROFIT QUESTION 4.9 Strategy 2 Pr(Profit=$ 8) = 0.27 Pr(Profit=$ 4)=0.73 Pr(Profit $ 4)=0.73 Pr(Profit $ 8)=1.00
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A A 2 (0.50) (0.50) (0.73) (0.27) $0 $15 $4 PROFIT QUESTION 4.9
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Unformatted text preview: Strategy 3 Pr(Profit=$15) )=0.50*0.27=0.135 Pr(Profit=$ 4)=0.73 Pr(Profit $ 4) = 0.865 Pr(Profit $15) = 1.00 Pr(Profit=$ 0)=0.50*0.27=0.135 Pr(Profit $ 0) = 0.135 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1-$2.00 $0.00 $2.00 $4.00 $6.00 $8.00 $10.00 $12.00 $14.00 $16.00 Strategy 1 Strategy 2 Strategy 3 0.135 0.55 0.73 0.865 1.00 $0 $4 $10.00 $15.00 $8.00...
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Solution Question 4.8 & 4.9 - Strategy 3...

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