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Roy3
New Member
USA
1 Posts |
 Posted - 09/09/2007 : 09:48:41
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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? |
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tkhunny
Advanced Member
USA
1001 Posts |
Posted - 09/09/2007 : 22:29:30
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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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