题目
题目
多项填空题

An investor is considering 2 investments, A, B, which can be purchased now for $10. There is a 40%chance that investment A will grow rapidly in value and a 60% chance that it will grow slowly. If A grows rapidly, the investor can cash it in for $80 or trade it for investment C, which has a 25% chance of growing to $100 and a 75% chance of reaching $80. If A grows slowly, it is sold for $50. There is a 70%chance that investment B will grow rapidly in value and a 30% chance that it will grow slowly. If B grows rapidly, the investor can cash it in for $100 or trade it for investment D, which has a 20% chance of growing to $95 and an 80% chance of reaching $80. If B grows slowly, it is sold for $45. A decision tree for the problem can be constructed as below.[Fill in the blank] Using backward induction and the expected monetary value (EMV) approach, what is the EMV at decision nodes 1 and 2 (indicated in red in the given diagram). (2 marks)[Fill in the blank] Evaluate the complete decision tree using the Expected Monetary Value (EMV) criteria and advice on the course of action. What is the EMV at decision node 3 as indicated in red in the diagram? (3 marks)[Fill in the blank]

题目图片
查看解析

查看解析

标准答案
Please login to view
思路分析
The problem asks us to use backward induction and EMV to fill in three values along the decision tree. First, focus on the A branch when A grows rapidly. At that node, the investor can either cash in for 80 or trade A for investment C, which has a 25% chance of reaching 100 and a 75% chance of reaching 80. The EMV of the trade option is 0.25×100 + 0.75×80 = 25 + 60 = 85, which is greater than the sure ......Login to view full explanation

登录即可查看完整答案

我们收录了全球超50000道考试原题与详细解析,现在登录,立即获得答案。

类似问题

更多留学生实用工具

加入我们,立即解锁 海量真题独家解析,让复习快人一步!