Which many oil giants subscribe including ken brown

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which many oil giants subscribe, including Ken Brown (see Problem 3-17 for details). In the last issue, the letter described how the demand for oil products would be extremely high. Apparently, the American consumer will continue to use oil products even if the price of these products doubles. Indeed, one of the articles in the Lubricant states that the chances of a favorable market for oil products was 70%, while the chance of an unfavorable market was only 30%. Ken would like to ` use these probabilities in determining the best decision. Equipment EMV Sub 100 300000 -200000 Oiler J 250000 -100000 Texan 75000 -18000 Probabilities 70% 30% 100 with a favorable market is too high. How much lower would this figure have to be for Ken to change his decision made in part (b)? For Ken to change his .70X = 205000 205000/.70= 292857 or 7143 (a) What decision model should be used? Ken Brown should use the Maximize Expected Monetary Value (EMV) model . (b) What is the optimal decision? After employing the probabilities in determining the best decision, Brown optimal decision is Sub 100. Favorable Market ($) Unfavorable Market ($) (300000*.70)+ (-200000*.30)= 150000 (300000*.70)+ (-200000*.30)= 145000 (300000*.70)+ (-200000*.30)= 47100 (c) Ken believes that the $300,000 figure for the Sub Solve for X : .70 X -200000(.30)= 145000 .70 X -60000= 145000 decision this figure have to be 292857 (or 7143 lower).
Problem 3-22 Allen Young has always been proud of his personal investment strategies and has done very well over the past several years. He invests primarily in the stock market. Over the past several months, however,

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