The outcome under each plan foreach state of the economy is given in the table b
ID: 1233051 • Letter: T
Question
The outcome under each plan foreach state of the economy is given in the table
below. Figures in the table areprofits measured in dollars. The probabilities for
Thevariance of profits in case of discount line outcome willbe:
A.782529468
B.790496496
C.801235659
D.823526908
4.The standard deviation of profits for Specialty line outcome willbe:
A.73111.2534
B.76225.6326
C.80212.5632
D.81396.5842
B.25121.85
C.26258.58
D.28115.77
6.Base on the calculations of standard deviation in both cases, whichof
thefollowing statements is TRUE:
A. Discountline is more risky.
B. Specialtyline is more risky.
C. Level ofrisk is same in both cases.
7.What is the advantage of the standard deviation over theaverage
deviation?
A. Becausethe standard deviation requires squaring of deviationsbefore
furthercomputation, positive and negative deviations do not cancelout.
B. Becausethe standard deviation does not require squaring of deviations,it
is easy totell whether deviations are positive or negative.
C. Thestandard deviation expresses the average deviation inpercentage
terms, sothat different choices can be more easilycompared.
D. Thestandard deviation transforms subjective probabilities intoobjective
ones so thatcalculations can be performed.
Economic conditions Probability Growth 0.3 Normal 0.5 Recession 0.2Explanation / Answer
Variance of profits in case of discount line B) 790496496 4. Standard deviation of profits for specialty line 79741 (given by none of the choices, perhaps there is a typo in thenumbers?) 5. Standard deviation of profits for discount line D) 28115.77 6. B) Based on the calculations, specialty line is more risky. 7. A) Positive and negative deviations do not cancel out.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.