d) 5 points) Capital Two is a financial services firm that specializes in credit scoring in B2B environments. Assuming Capital Two is infallible (perfectly accurate). what would be the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? Unfortunately, Capital Two is not perfectly accurate. In fact, Capital Two has shared with Buddyweiser information about the accuracy of its forecast. For customers of this type that ended up defaulting on their financial obligations, Capital Two produced a prediction of default in 80% of the occasions and a prediction of no default in 20% of the occasions. For customers that ended up honouring their financial obligations, Capital Two produced a prediction of no default in 90% of the occasions, and a prediction of default in 10% of the occasions. e) (5 points) Taking this information about Capital Two's accuracy, what is the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? The beer manufacturer Buddyweiser must decide whether to extend credit to a chain of restaurants that would like to open an account with the firm. Past experience with new accounts of this type indicates that 90% of the customers meet their financial obligations with Buddyweiser, in which case Buddyweiser can expect to make a profit of 120,000, and 10% of the customers default on their financial obligations with Buddyweiser, in which case Buddyweiser can expect to make a loss of 1,000,000. a) (10 points) Assuming Buddyweiser is risk neutral, would you recommend Buddyweiser to extend credit to the chain of restaurants? Why (not)? Draw a decision tree to answer this question. b) (5 points) Taking risk into consideration, would your recommendation chanqe? For the remainder of this question, assume Buddyweiser is risk neutral with respect to this decision. c) (5 points) Is the decision sensitive to the assumption that the probability that the chain of restaurants defaults is 10% ? Why (not)? d) 5 points) Capital Two is a financial services firm that specializes in credit scoring in B2B environments. Assuming Capital Two is infallible (perfectly accurate), what would be the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? Unfortunately, Capital Two is not perfectly accurate. In fact, Capital Two has shared with Buddyweiser information about the accuracy of its forecast. For customers of this type that ended up defaulting on their financial obligations, Capital Two produced a prediction of default in 80% of the occasions and a prediction of no default in 20% of the occasions. For customers that ended up honouring their financial obligations, Capital Two produced a prediction of no default in 90% of the occasions, and a prediction of default in 10% of the occasions. e) (5 points) Taking this information about Capital Two's accuracy, what is the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? d) 5 points) Capital Two is a financial services firm that specializes in credit scoring in B2B environments. Assuming Capital Two is infallible (perfectly accurate). what would be the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? Unfortunately, Capital Two is not perfectly accurate. In fact, Capital Two has shared with Buddyweiser information about the accuracy of its forecast. For customers of this type that ended up defaulting on their financial obligations, Capital Two produced a prediction of default in 80% of the occasions and a prediction of no default in 20% of the occasions. For customers that ended up honouring their financial obligations, Capital Two produced a prediction of no default in 90% of the occasions, and a prediction of default in 10% of the occasions. e) (5 points) Taking this information about Capital Two's accuracy, what is the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? The beer manufacturer Buddyweiser must decide whether to extend credit to a chain of restaurants that would like to open an account with the firm. Past experience with new accounts of this type indicates that 90% of the customers meet their financial obligations with Buddyweiser, in which case Buddyweiser can expect to make a profit of 120,000, and 10% of the customers default on their financial obligations with Buddyweiser, in which case Buddyweiser can expect to make a loss of 1,000,000. a) (10 points) Assuming Buddyweiser is risk neutral, would you recommend Buddyweiser to extend credit to the chain of restaurants? Why (not)? Draw a decision tree to answer this question. b) (5 points) Taking risk into consideration, would your recommendation chanqe? For the remainder of this question, assume Buddyweiser is risk neutral with respect to this decision. c) (5 points) Is the decision sensitive to the assumption that the probability that the chain of restaurants defaults is 10% ? Why (not)? d) 5 points) Capital Two is a financial services firm that specializes in credit scoring in B2B environments. Assuming Capital Two is infallible (perfectly accurate), what would be the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser? Unfortunately, Capital Two is not perfectly accurate. In fact, Capital Two has shared with Buddyweiser information about the accuracy of its forecast. For customers of this type that ended up defaulting on their financial obligations, Capital Two produced a prediction of default in 80% of the occasions and a prediction of no default in 20% of the occasions. For customers that ended up honouring their financial obligations, Capital Two produced a prediction of no default in 90% of the occasions, and a prediction of default in 10% of the occasions. e) (5 points) Taking this information about Capital Two's accuracy, what is the value added by Capital Two's forecast of whether the chain of restaurants will default on its financial obligations with Buddyweiser