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Autosave QUES 5.5 = Design Layout Home Incert Draw References Mailings Review Share Comments View Tell me 11 inherit 103A A Aa A E. Aachete

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Autosave QUES 5.5 = Design Layout Home Incert Draw References Mailings Review Share Comments View Tell me 11 inherit 103A" A Aa A E. Aachete Atecente AaBb AaBb c ABCDE ABC ABCD No San Heading! Weing Hang Heading Paste BIU. Pine Format Text Effects QUESTION 15 1. Exhibit 14.3 The following questions are based on the information below. An investor is considering 4 investments, A, B, C and leaving his money in the bank. The payoff from cach investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following payoff matrix has been developed for the decision problem. The investor has estimated the probability of a declining economy 70% and an expanding economy at 30% AA Shadow Reflection Glow Soft Edges 3-0 Format A 8 D E F G H 11 Payoff Matrix Regret Matrix 2 Economy Decline EMV EOL Economy Decline Expand -10 90 20 50 40 45 15 20 Investment A Investment 5 6 B 7 C Bank 9 10 Probability Here 0.7 03 Prota 07 03 2. Refer to Exhibit 14.3. What fomula should go in cells and copied to F6 F8 of the spreadsheet if the expected regret decision rule is to be used? 2-MAX(ESS:BSK)-MINESS:B$8) b.=MAX(BSS:B$8)-BS c.-ESS-MAX(B$5-B$8) d.-MAX(BSS:BSN)-MAX(B5) Page 11 of 14 2631 words English Philippines Focus # = 150%

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