Suppose you have the following probability distribution. State of nature Profit
ID: 2767349 • Letter: S
Question
Suppose you have the following probability distribution.
State of nature
Profit Level
Probability
Optimistic
$500
0.3
Most Likely
100
0.6
Pessimistic
-400
0.1
What is the mean?
A. 68,100
B. 1.5
C. 261
D. 170
E. None of the above
What is the variance?
A. 68,100
B. 1.5
C. 261
D. 170
E. None of the above
What is the standard deviation?
A. 68,100
B. 1.5
C. 261
D. 170
E. None of the above
What is the coefficient of variation?
A. 68,100
B. 1.5
C. 261
D. 170
E. None of the above
State of nature
Profit Level
Probability
Optimistic
$500
0.3
Most Likely
100
0.6
Pessimistic
-400
0.1
Explanation / Answer
State of nature Profit Level 'X' Probability 'P' XP X^2P Optimistic 500 0.3 150 75,000 Most Likely 100 0.6 60 6,000 Pessimistic -400 0.1 -40 16,000 170 97,000 Mean 170 Variance = X^2P - XP^2 68,100 Standard Deviation Variance square root of 68,100 261 Coefficient of Variation Coefficient of Variation CV = Standard Deviation / Mean 1.5
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.