Author:
Christine Farr

Week Two Homework Assignment1. A student has an important exam coming up and is contemplating not studying for theexam in order to attend a party with his friends. The student must earn a minimum scoreof 70% on the exam in order to successfully maintain his desired GPA. The exam willconsist of twenty multiple choice questions with four possible answers for each question.Assuming correctly guessing the answer to a given question follows a binomialdistribution, what is the probability that the student would earn less than the requiredminimum score of 70% on the exam based solely upon randomly guessing the correctanswer for each question?2. The mean time to complete a construction project is 52 weeks with a standard deviationof 3 weeks. Assuming the probability of completing the project follows a normaldistribution, what is the probability of completing the project between 56 weeks and 64weeks?3. Based upon the following data, what is the expected value of perfect information,assuming the probability of the state of nature that favors location A occurring is 0.50, theprobability of the state of nature that favors location B occurring is 0.30, and theprobability of the state of nature that favors neither location A nor location B occurring is0.20.Payoff MatrixAlternative AAlternative BAlternatives A and BNeither Alternative Anor Alternative BState of NatureFavorsAlternative A$88($8)$80$0State of NatureFavorsAlternative B($5)$156$151$0State of Nature FavorsNeither Alternative Anor Alternative B($5)($8)($13)$0Note: The values in the preceding table are shown in millions of dollars.1 of 24. Based upon the following data,, what is the optimal decision using the expectedopportunity loss decision rule, assuming the probability of the state of nature that favorsalternative A occurring is 0.50, the probability of the state of nature that favors alternativeB occurring is 0.30, and the probability of the state of nature that favors neither locationA nor location B occurring is 0.20?Payoff MatrixAlternative AAlternative BAlternatives A and BNeither Alternative Anor Alternative BState of NatureFavorsAlternative A$88($8)$80$0State of NatureFavorsAlternative B($5)$156$151$0State of Nature FavorsNeither Alternative Anor Alternative B($5)($8)($13)$0

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