Chapter 20, Problem 19PS

a.

To determine

Determine the revised probability of the occurrence of events $E_1$ , $E_2$ and $E_3$ .

b.

To determine

Compute the expected monetary value of Action $A$ and Action $B$ .

c.

To determine

Calculate the expected opportunity loss of Action A and Action B.

d.

To determine

Explain the meaning of the expected value of perfect information for this problem.

e.

To determine

Explain the reason for selecting either of the action from the results of part (b) and (c)

f.

To determine

Compute the coefficient of variation for each action.

g.

To determine

Compute the return-to-risk ratio for each action

h.

To determine

Determine on the basis of part (f) and part (g) which action to choose.

i.

To determine

Compare the results from part (e) and part (h) and explain the differences.