Question $1.$

Consider the following decision tree $($based on the net returns$).$

d

a$-$ How many decision strategies are possible?

b$-$ Answer the following questions shortly

Prob $($of getting positive returns in Al$)=$

Prob $($of getting negative returns in $A1$

of returns in $A1$

Prob $($of getting positive returns in A$3)=$

EMV $($of returns in $A3$

c$-$ Solve the above decision tree and state the optimal strategy for maximizing return. $($Number your nodes and show all your EMV calculations$)($You may use part $($b$))$

d$-$Find three decision strategies in this decision problem, and show them by subtrees.

e$-$ Draw the cumulative risk profile for three decision strategies found in part $($d$)$ on one graph. Can you see any case of dominance?