Decision Tree Time

Christine and Shane bet on a race. if Christine wins, she will receive +$1000 ( so an inflow of $1000). If she loses, she will have to pay paul $1000( so an outflow of $1000).

There is a 40% chance shane will NOT make it to the track. He easily distracted. If he does not make it to the track, there is " no bet" - neither party pays or receives anything.

If Shane DOES show up, there is a 90% chance he will add 100 octane fuel to his car ( unfair) and a 10% chance he will not.

If shane adds 100 octane fuel, Christine will attempt to deflate the tires on his vehicle. There is a 40% chance she will fail as he be watching closely. If she can deflate his tires she will win, but if she can't deflate his tires she will lose.

If Shane does not add 100 octane fuel, Christine will not mess with his tires. Christine is clearly a better driver and in this scenario, shr stands an 80% chance of winning.

Draw the race's decision tree, clearly noting probabilities at each node, and joint probabilities. compute Christine's NPV and Coefficient of variation. Make sure joint probabilities sum to 100%