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Question 8 How does a manager make decision uncertainty? Assume that a manager has two options which will give two different outcome level. Option1. The
Question 8 How does a manager make decision uncertainty? Assume that a manager has two options which will give two different outcome level. Option1. The manger certain that the outcome will be $80000 Option 2. The manager expect following likely outcome Market Condition Probability Value Recession 1/3 0 Normal 1/3 100,000 Boom 1/3 140,000 Calculate the expected value and determine the risk exposure faced by the manager for option 2. What is the risk premium for option 2. Which option the manager consider
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