Question 1 (2 points)
uestion 1 Unsaved
CASE 1 A payoff table of maximization problem is given
State of Nature
Decision
s1
s2
s3
d1
250
750
500
d2
300
-250
1200
d3
500
500
600
What choice should be made by the optimistic decision maker?
Question 1 options:
d2
d1
d3
d1 and d3
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Question 2 (2 points)
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case 1 (continued)
What choice should be made by the conservative decision maker?
Question 2 options:
d1
d2
d3
d1 and d2
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Question 3 (2 points)
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Case 1 (continued)
What decision should be made under minimax regret?
Question 3 options:
d1
d2
d3
d2 and d3
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Question 4 (2 points)
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case 1(continued)
If the probabilities of s1, s2, and s3 are .2, .5, and .3, respectively, then what choice should be made under expected value?
Question 4 options:
d1
d2
d3
non of these alternatives is correct
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Question 5 (2 points)
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Case 1(continued)
What is EV (d1)?
Question 5 options:
EV(d1)=360
EV(d1)=-75
EV(d1)=575
15
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Question 6 (2 points)
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Case 1 (continued)
EV(d3) is
Question 6 options:
300
250
575
530
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Question 7 (2 points)
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EV(d2) is
Question 7 options:
295
575
600
530
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Question 8 (2 points)
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Case 1 continued
EVPI is
Question 8 options:
200
260
180
130
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Question 9 (2 points)
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Case 2
Moving averages often are used to identify movements in stock prices. Daily closing prices (in dollars per share) for IBM for August 24, 2005, through September 16, 2005, follow (Compustat, February 26, 2006).
Day
Price ($)
Day
Price ($)
August 24
81.32
September 7
80.98
August 25
81.10
September 8
80.80
August 26
80.38
September 9
81.44
August 29
81.34
September 12
81.48
August 30
80.54
September 13
80.75
August 31
80.62
September 14
80.48
September 1
79.54
September 15
80.01
September 2
79.46
September 16
80.33
September 6
81.02
Use a three-day moving average to smooth the time series. Forecast the closing price for the next trading day using manual calculations and Excel.Please, find MSE using Excel.
Question 9 options:
Forecast for the next trading day is 80.55
MSE is .45
Forecast for the next trading day is 80.31
MSE is .42
Forecast for the next trading day is 80.27
MSE is .50
non of these alternatives is correct
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Question 10 (2 points)
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Case 2 (continued)
Use exponential smoothing with a smoothing constant of α=.6 to smooth the time series. Forecast the closing price for the next trading day. Use manualy calculations and Excel. Find MSE. Please use Excel.
Question 10 options:
Forecast for the next trading day is 80.21
MSE is .52
Forecast for the next trading day is 80.31
MSE is .55
Forecast for the next trading day is 80.31
MSE is .42 (0.416)
Non of these alternatives is correct
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