4 relatively easy Questions on Finance/excel. Please view the document and let me know what you think.

(1) For each decision table, find the best alternative using a. Pessimism b. Optimism c. Hurwicz ( 0.3 ) d. Regret (2) Consider the payoff table below. Assume that the probabilities of the states of nature are as follows: P(s1) = 0.4 (a) P(s2) = 0.3 P(s3) = 0.3 Find the alternative that maximizes the expected net dollar return. (b) (c) Find the alternative that minimizes the expected regret. Suppose that P(s1) and P(s2) are not known, but P(s3) is estimated to be 0.1. Plot expected net dollar return versus P(s2) for the three alternatives in the same graph, and find the range for P(s2) for which each alternative is optimal. (d) In the same scenario as part (c), plot expected regret versus P(s2) for the three alternatives in the same graph, and find the range for P(s2) for which each alternative is optimal. (e) How are the plots in parts (c) and (d) related? (3) Suppose the Pittsburgh Steelers return the opening kickoff for a touchdown. Draw a decision tree for the decision whether to kick for an extra point or attempt a two-point conversion. (Assume that early in a football game, maximizing expected points is an optimal strategy for winning the game.) Are your probability assessments objective or subjective? 1 (4) Suppose that you work for the snow removal program for the City of Pittsburgh. They are trying to decide what supplies to order for next year. Ice control COSTS depend on the temperature (cold or mild) and the amount of snow (heavy or light). You have three options: rock salt, brine, and cinders. You have constructed the following decision tree. Answer these questions but show all of your work 4.1) Which statement is true? A) You should select Salt. B) You should select Brine C) You should select Cinders. D) "None of the above" or "More than one of the above" or "Insufficient information" Next homework ... 4.2) Which statement is true? A) The EVPI(temperature) is greater than the EVPI(amount of snow). B) EVPI(amount of snow) given cold temperature for sure is greater than EVPI(amount of snow) given mild temperature for sure. C) EVPI(snow and temperature) is greater than twice the EVPI(snow). D) "None of the above" or "More than one of the above" or "Insufficient information" 4.3) Suppose a forecaster can predict snow amount with 60% accuracy (p(\"heavy\"| heavy) = p(\"light\"| light) = 0.60), then which is true? A) The EVII for this forecaster is greater than $3.50 B) The EVII for this forecaster is between $2.50 and $3.00 C) The EVII for this forecaster is between $1.00 and $2.00 D) "None of the above" or "More than one of the above" or "Insufficient information" 2