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10/30/2015

TheAceStudent:WeekTwoHomeworkAssignment

WeekTwoHomeworkAssignment
WeekTwoHomeworkAssignment
WeekTwoHomeworkAssignment
1.Astudenthasanimportantexamcomingupandiscontemplatingnotstudyingfortheexamin
ordertoattendapartywithhisfriends.Thestudentmustearnaminimumscoreof70%onthe
examinordertosuccessfullymaintainhisdesiredGPA.Theexamwillconsistoftwentymultiple
choicequestionswithfourpossibleanswersforeachquestion.Assumingcorrectlyguessingthe
answertoagivenquestionfollowsabinomialdistribution,whatistheprobabilitythatthestudent
wouldearnlessthantherequiredminimumscoreof70%ontheexambasedsolelyuponrandomly
guessingthecorrectanswerforeachquestion?
2.Themeantimetocompleteaconstructionprojectis52weekswithastandarddeviationof3
weeks.Assumingtheprobabilityofcompletingtheprojectfollowsanormaldistribution,whatisthe
probabilityofcompletingtheprojectbetween56weeksand64weeks?
3.Baseduponthefollowingdata,whatistheexpectedvalueofperfectinformation,assumingthe
probabilityofthestateofnaturethatfavorslocationAoccurringis0.50,theprobabilityofthestate
ofnaturethatfavorslocationBoccurringis0.30,andtheprobabilityofthestateofnaturethat
favorsneitherlocationAnorlocationBoccurringis0.20.
PayoffMatrix

StateofNatureFavorsAlternativeAStateofNatureFavorsAlternativeBStateofNature
FavorsNeitherAlternativeAnorAlternativeB
AlternativeA$88($5)($5)
AlternativeB($8)$156($8)
AlternativesAandB$80$151($13)
NeitherAlternativeA
norAlternativeB$0$0$0
Note:Thevaluesintheprecedingtableareshowninmillionsofdollars.

4.Baseduponthefollowingdata,,whatistheoptimaldecisionusingtheexpectedopportunity
lossdecisionrule,assumingtheprobabilityofthestateofnaturethatfavorsalternativeAoccurring
is0.50,theprobabilityofthestateofnaturethatfavorsalternativeBoccurringis0.30,andthe
probabilityofthestateofnaturethatfavorsneitherlocationAnorlocationBoccurringis0.20?
PayoffMatrix
StateofNatureFavorsAlternativeAStateofNatureFavorsAlternativeBStateofNature
FavorsNeitherAlternativeAnorAlternativeB
AlternativeA$88($5)($5)
AlternativeB($8)$156($8)
AlternativesAandB$80$151($13)
NeitherAlternativeA
norAlternativeB$0$0$0
Note:Thevaluesintheprecedingtableareshowninmillionsofdollars.
5.Baseduponusingtheexpectedmonetaryvaluedecisionruleandthefollowingdata,forwhat
rangeofprobabilityofthestateofnaturethatfavorsalternativeAoccurringisselectingalternative
Atheoptimaldecision?(Hint:VarytheprobabilityofthestateofnaturethatfavorsAlternativeA
occurringfrom0.0to1.0inincrementsof0.01.)
PayoffMatrix
StateofNatureFavorsAlternativeAStateofNatureFavorsAlternativeB
AlternativeA$105.0($5.0)
AlternativeB($25.0)$55.0
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TheAceStudent:WeekTwoHomeworkAssignment

AlternativesAandB$80.0$50.0
NeitherAlternativeA
norAlternativeB$0.0$0.0
Note:Thevaluesintheprecedingtableareshowninmillionsofdollars.WeekTwoHomework
Assignment
1.Astudenthasanimportantexamcomingupandiscontemplatingnotstudyingfortheexamin
ordertoattendapartywithhisfriends.Thestudentmustearnaminimumscoreof70%onthe
examinordertosuccessfullymaintainhisdesiredGPA.Theexamwillconsistoftwentymultiple
choicequestionswithfourpossibleanswersforeachquestion.Assumingcorrectlyguessingthe
answertoagivenquestionfollowsabinomialdistribution,whatistheprobabilitythatthestudent
wouldearnlessthantherequiredminimumscoreof70%ontheexambasedsolelyuponrandomly
guessingthecorrectanswerforeachquestion?
2.Themeantimetocompleteaconstructionprojectis52weekswithastandarddeviationof3
weeks.Assumingtheprobabilityofcompletingtheprojectfollowsanormaldistribution,whatisthe
probabilityofcompletingtheprojectbetween56weeksand64weeks?
3.Baseduponthefollowingdata,whatistheexpectedvalueofperfectinformation,assumingthe
probabilityofthestateofnaturethatfavorslocationAoccurringis0.50,theprobabilityofthestate
ofnaturethatfavorslocationBoccurringis0.30,andtheprobabilityofthestateofnaturethat
favorsneitherlocationAnorlocationBoccurringis0.20.
PayoffMatrix

StateofNatureFavorsAlternativeAStateofNatureFavorsAlternativeBStateofNature
FavorsNeitherAlternativeAnorAlternativeB
AlternativeA$88($5)($5)
AlternativeB($8)$156($8)
AlternativesAandB$80$151($13)
NeitherAlternativeA
norAlternativeB$0$0$0
Note:Thevaluesintheprecedingtableareshowninmillionsofdollars.

4.Baseduponthefollowingdata,,whatistheoptimaldecisionusingtheexpectedopportunity
lossdecisionrule,assumingtheprobabilityofthestateofnaturethatfavorsalternativeAoccurring
is0.50,theprobabilityofthestateofnaturethatfavorsalternativeBoccurringis0.30,andthe
probabilityofthestateofnaturethatfavorsneitherlocationAnorlocationBoccurringis0.20?
PayoffMatrix
StateofNatureFavorsAlternativeAStateofNatureFavorsAlternativeBStateofNature
FavorsNeitherAlternativeAnorAlternativeB
AlternativeA$88($5)($5)
AlternativeB($8)$156($8)
AlternativesAandB$80$151($13)
NeitherAlternativeA
norAlternativeB$0$0$0
Note:Thevaluesintheprecedingtableareshowninmillionsofdollars.
5.Baseduponusingtheexpectedmonetaryvaluedecisionruleandthefollowingdata,forwhat
rangeofprobabilityofthestateofnaturethatfavorsalternativeAoccurringisselectingalternative
Atheoptimaldecision?(Hint:VarytheprobabilityofthestateofnaturethatfavorsAlternativeA
occurringfrom0.0to1.0inincrementsof0.01.)
PayoffMatrix
StateofNatureFavorsAlternativeAStateofNatureFavorsAlternativeB
AlternativeA$105.0($5.0)
AlternativeB($25.0)$55.0
AlternativesAandB$80.0$50.0
NeitherAlternativeA
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TheAceStudent:WeekTwoHomeworkAssignment

norAlternativeB$0.0$0.0
Note:Thevaluesintheprecedingtableareshowninmillionsofdollars.
WeekTwoHomeworkAssignment

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