Question:

The National Oil Company is considering bidding for an offshore oil drilling contract to be awarded by the government. Company management have determined the bid price to be $300 million, with a 60% chance of winning. If they win the contract (cost of the drilling rights), they must decide whether to set up a new drilling operation or to move an existing operation, which had been proved successful, to the new site. With either operation the probability of success and the financial return is as follows:

New Drilling Operation Old Operation Moved

Outcome Probability Revenue ($ in millions) Probability Revenue($ in millions)

Success 0.7 400 0.8 350

Failure 0.3 100 0.2 175

If they do not bid or they lose the contract, the company will use the $300 million to modernize its operations, with the increased profit to the company being either 5% or 6%, with respective probabilities of 0.4 and 0.6.

(a) What strategy should National Oil pursue (bid or modernize)? (show work)

Create Risk Profile for National Oil.

Question 95 2 pts Which of the following nonparametric tests is used to answer the following research question: "What is the exact likelihood of getting six heads on a toss of six coins?" O McNemar O Kolmogorov-Smirnov O the median test O Fisher's exactPartial Question 3 2.67 / 4 pts Select each of the statements that are true: Both the Wilcoxon Signed Rank Test and the Sign Test ignore some of the sample information by not using the actual observed values to compute the test statistics. The Sign test tends to be less powerful than the Wilcoxon Signed Rank Test A statistician should always use the statistical test that results in the smallest p value. In some samples, analyses with different inference tools will draw similar conclusions.IA. The study of economics is comprised of three general areas: microeconomics, macroeconomics, and econometrics. What is econometrics? Provide a comprehensive definition of econometrics. IB. What are the two general uses of econometric models? List and briefly discuss both of these. IC. The multiple linear regression model was argued, in general, to be superior to the uni-variate linear regression model for two reasons. Considering your response to IB, discuss the two reasons the multiple regression model is superior.(7.1b-e) Suppose we are able to collect a random sample of data on economics majors at a large university. Further suppose that, for those entering the workforce, we observe their employment status and salary 5 years after graduation. Let SAL = $ salary for those employed, GPA = grade point average on a 4.0 scale during their undergraduate program, with METRICS = 1 if student took econometrics, METRICS = 0 otherwise. a. Assuming B2 and B; are positive, draw a sketch of E(SALIGPA, METRICS) = By+ $2GPA+ B; METRICS. b. Define a dummy variable FEMALE = 1, if the student is a female; 0 otherwise. Modify the regression model to be SAL = B,+B2GPA+ B; METRICS+OFEMALE+e. What is the expected salary of a male who has not taken econometrics? What is the expected salary of a female who has taken econometrics? c. Consider the regression model SAL = 1+BGPA+3METRICS+6, FEMALE+52 (FEMALE:METRICS)- e What is the expected salary of a male who has not taken econometrics? What is the expected salary of a female who has taken econometrics? (Please note that actual numeric values are not required. Simply modify the equation depending on the relevant indicator variables). d. For the equation given in part c, assume that 6,