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You have been asked to use the expected-value model to assess the risk in developing a new product Each strategy requires a different sum of
You have been asked to use the expected-value model to assess the risk in developing a new product Each strategy requires a different sum of money to be invested and produces a different profit payoff as shown below Assume that the probabilities for each stale are 30 percent. 50 percent, and 20 percent respectively EVS_1 B. EVS_2 C EVS_3 D. EVS_4 E. Using the concept of expected value, what risk (i.e. strategy) should be taken? (Possible answers are S_1. S_2. S_3, S_4. S_5) F. If the project manager adopts a go-for-broke attitude, what strategy should be selected? (Possible answers are S_1. S_2. S_3. S_4. S_5) G If the project manager is a pessimist and does not have the option of strategy S_5 what risk would be taken? (Possible answers are S_1. S_2. S_3. S_4 H. What would your answer be to the previous quest on (pal G.) If S_5 was an option? (Possible answers are S_1. S_2. S_3. S_4. S_5)
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