Author 
Topic 

Roy3
New Member
USA
1 Posts 
Posted  09/09/2007 : 09:48:41

I am having trouble with decision and opportunity loss tables any help would be great, thank you all for your time. Roy
Decision Alternative...Good Economy...Poor Economy Stock Market.............80,000............20,000 Bonds.......................30,000.............20,000 CDs.........................23,000.............23,000 Probability.................0.5.................0.5 What decision would maximize expected profits?
What is the maximum amount that should be paid for a perfect forecast of the economy?
Develop an opportunity loss table:
What decision would minimize the expected opportunity loss?
What is the minimum EOL? 


tkhunny
Advanced Member
USA
1001 Posts 
Posted  09/09/2007 : 22:29:30

Expected value is simple, as there are only two probabilities.
Stock: 0.5*80000+0.5*(20000)
You do the other two and compare the results.
Forecast Price? How much can the decision be improved?
There is only one with a loss. Stay away from that one. Does your definition of loss include negative losses? In other words, is a gain of 10,000 a loss or 10,000, or is it just a loss of zero (0)? 



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