Question 33 What does regression analysis attempt to establish? o a. multicollinearity o b. linearity in the relationship between independent variables o c. a mathematical relationship between a dependent variable, for which future values will be forecast, and one or more independent variables with known values o d. linearity in the relationship between a dependent variable and a set of independent variables Question 34 How are states of nature assigned probabilities? oa. Use historical data. o b. Use best judgements. oc. Use interview results. o d. All of these. Exhibit 14.5 The following questions are based on the information below. An investor is considering 4 investments, A, B, C, D. The payoff from each investment is a function of the economic climate over the next 2 years. The economy can expand or decline. The following decision tree has been developed for the problem. The investor has estimated the probability of a declining economy at 40% and an expanding economy at 60%. Investment Economy Payoff E 0.6 30 A D04 20 E0.6 30 B D0.4 40 E06 40 D0.4 20 E 0.6 30 D D04 90 E=Expanding Economy D=Declining Economy Refer to Exhibit 14.5. What is the expected monetary value for the investor's problem? O a. 32 o b. 42 O c. 36 o d. 38 Question 36 Decision Analysis techniques provide modeling techniques to help decision makers make decisions. Which of the following is not typically a benefit of decision analysis? o a. Incorporating uncertainty via exponential distributions. o b. Incorporating risk via utility theory functions. oc. Incorporating uncertainty via probabilities. od. Structuring decision strategies via decision trees