Question

33. Your firm just got a buyout offer of $5 million. There is a 25% chance that profits will be $10 million, a 35% chance that profits will be $6 million, and a 40% chance that profits will be $2 million. Should you accept the offer? You are risk neutral. a. No, your expected profits equal $5.4 million. Tugtuo lo b. No, your expected profits equal $3.4 million. c. Yes, your expected profits equal $3.4 million. d. Yes, there's a 40% chance that profits will be less than $5 million. VS AOS 900 000 02 bns net subota 0.23 34. Which of the following statements is true? 0012 i 2200 laris CD a. An expected value differs from an average. 00 2t on b. The range is the difference between the largest and smallest values in the data. C. The standard deviation is the square root of the variance. Jonnas 1200 inim est d. All of the above baseansled ris og LOY.000,62 ay 19 ani to 000.22 lossbowolents and 35. Which of the following statements is correct? 200 w svib o y mon000.12 to 20 a. Managers usually have objective data about the risks they face. b. Managers tend to overestimate their chances of success. c. Most subjective probabilities are accurate. d. All of the above 000 e 00022 300.02 roinnibos

Answer 1

Question 33

No, Your expected profits equal $5.4 Billion.

= (0.25 x 10) + (0.35 x 6) + (0.4 x 2)

Million

= 2.5 +2.1 +0.8 = $5.4

Question 34

All the above

The expected value is used in the case of random variables while the average is the sum of all values divided by the number of values.

Question 35

Managers tend to overestimate their chances of success

Managers usually overestimate the success because of their experience and skills and neglect the experience of their competitors.