18 Questions
What is the expected value of Node C?
₱35,625,000
What decision was made based on the decision tree in the text?
To maintain status quo
When will a decision tree always yield the same decision and expected payoff?
When only one decision needs to be made
In the context of the text, what is computed for the nodes B, C, and D?
Expected values
What is the primary focus of a Decision Tree with Posterior Probabilities?
Utilizing positive and negative reports
Which criterion leads to selecting the highest solution among circle nodes in a decision tree?
Expected value criterion
What is the probability P(A) of rolling a number 1, 3, or 5 on a regular die?
1/3
What is the probability P(C) of rolling a number 6 on a regular die?
1/6
If a person purchases four raffle tickets, what is the expected value?
-P41.60
What is the expected return for Investment A which pays an 8% return with a failure rate of 5%?
+₱2,600
What type of investment is better based on the expected return: Investment A or Investment B?
Investment A
If a regular die is rolled, what is the probability P(B) of getting a number 2 or 4?
1/3
What is the formula for calculating the expected value of a discrete random variable?
$E(x) = k(P)$
In Example 2, what is the outcome if a 2 or a 4 appears when a gambler tosses a die?
The gambler loses $9
What is the fair price to pay for a raffle ticket that offers a first prize of $500,000 with a probability of 0.0001 and a second prize of $200,000 with a probability of 0.0005?
$150
How is the concept of expected value important in characterizing the probability distribution of a discrete random variable?
It represents the theoretical average of the variable
If a player stands to win an amount $k with probability $P, how is the player's expected value defined?
$k/P$
How is the payoff table used in decision-making based on maximin, maximax, and minimax regret criteria?
To identify the worst payoff and select the best decision based on it (maximin)
Test your knowledge on constructing a payoff table for investment decisions and determining the best decision based on different criteria such as maximin, maximax, and minimax regret. Explore the concept of Expected Value and Mathematical Expectations in decision-making.
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