dr. Jacobs west is a investment manager for Prokop investment. he is currently faced with the question of which company to invest in. there are five potential investment companies located in waterloo, Vancouver, Calgary, Yellowknife, and New York.  Ignacio must make this investment (i.e., no option to forego the investment). the level of interest rates impacts the profit from each investment. the following profits are indicated below.

city of investment                          low             moderate              high 

waterloo                                    $24.00           $20.00                    $15.00

Vancouver                                 $28.00           $15.00                    $10.00

Calgary                                       $ 20.00          $20.00                    $20.00

yellow knife                                $20.00           $18.00                   $16.00

new york                                      $40.00            $22.00                  $12.00

prior prob                                        o.5                 0.3                        0.2

1. are there any dominated or absoilutely dominated al;ternatives?

2. ignoring prior probibilty, what is the best decision:

a. using optimistic criteria

b. using pessimistic criteria

c. using the minimax regret approach

3. using prior probabbilities

a. what is the best decision using the expected value approach?

b. what is the best decision using expected opportunity loss?

4. what is the expected value of perfect information (EVPI) 

 

Answer rating: 100% (QA)

1 One alternative is Calgary as the profit is same irrespective of the type of interest rate The second alternative is New York as it has high profits ... View the full answer