BUSINESS MATH & LATEST
STATISTICS - IVY
SOFTWARE
A band of treasure hunters is trying to determine whether eighteenth-
century pirates buried any treasures on a small island. They figure that if
they find any signs of early settlement on the island that there is a good
chance that treasure is buried there. Which of the following represents
the left-most event or decision node on the treasure hunter's decision
tree?
A) Pirates bury or do not bury their treasure
B) Treasure hunters find or do not find signs of settlement
C) Settlement was or was not built
D) None of the above - ANSWERS-B) Treasure hunters find or do not
find signs of settlement
Which of the following would be best represented by a decision node?
A) Bob rides a cab or a bus to work;, whichever he can find the most
quickly
B) Sal either wins or doesn't win the lottery
C) Jill goes to work for one of two firms who have offered her a position
D) None of the above - ANSWERS-C) Jill goes to work for one of two
firms who have offered her a position
END OF
PAGE
1
, BUSINESS MATH & LATEST
STATISTICS - IVY
SOFTWARE
A local artist has three civic buildings, one of which she wants to paint.
If she paints any of these buildings, she can sell the painting to the
organization that occupies the building, sell the paining to a private
collector or donate it to a small museum. The order for the decision tree
would follow which way?
A) decision node, event node
B) event node, decision node, event node
C) event node, event node,
D) None of the above - ANSWERS-D) None of the above
It would actually be decision node (which building to paint), decision
node (what to do with the painting)
True/False: the Expected Monetary Value (EMV) is a number based on
averaging - ANSWERS-True
Marcie wants to invest her money in the stock of one of two companies:
Writeoff, a maker of erasers, or Outatwon Books, a publisher of travel
guides. She has a 0.7 probability of making $10,000 and a 0.3
probability of losing $25,000 with Writeoff stock, and a 0.45 probability
of making $3000 and a 0.55 probability of losing $500 with Outatown
END OF
PAGE
2
, BUSINESS MATH & LATEST
STATISTICS - IVY
SOFTWARE
Books stock. If she does nothing, she will neither gain nor lose money.
Should she invest in Writeoff stock, Outatown stock or do nothing? -
ANSWERS-Invest in Outatown stock
Referring to Illustration 9 in Chapter 5, it shows the decision tree for
three projects in which the AOK company can invest (they can only
invest in one and must invest). In which one of the three projects should
AOK invest, based on EMV?
A) Project A
B) Project B
C) Project C
D) None of the above, they are all equal. - ANSWERS-C) Project C
True/False: the EMV of an alternative with 0.5 probability of making
$500 is definitely $250. - ANSWERS-False
You cannot calculate the EMV with just this information. You need to
know all possible returns, not just one.All possible outcomes should
equal one, but you only have 0.5 of the information required.
Which of the following nodes could be combined into one?
END OF
PAGE
3
, BUSINESS MATH & LATEST
STATISTICS - IVY
SOFTWARE
A) If Jay decides to go to lunch, he has to decide where to go
B) After Jay decides to go out to lunch, he has to make sure he doesnt
have a meeting and, if he doesnt, he has to decide where to go out to
lunch
C) Jay finds out whether he has a meeting, then he will decide
D) None of the above - ANSWERS-A) If Jay decides to go to lunch, he
has to decide where to go
A has two decision modes, but B has a decision mode and an event
mode, and C has an event node and a decision mode. So only A has two
of the same and can be combined.
Tim has not been doing well in finance class. His professor tells him to
write up a case analysis for her in order to pass the class. He can still
pass the class without the write-up, just like he still can fail with it, since
the final exam is coming up. Which of these decisions would have a
vertical line at the end of the decision node:
A) Do nothing (dont write the case analysis)
B) Pass the final exam
C) Write the case analysis
D) None of the above - ANSWERS-D) None of the above
END OF
PAGE
4
STATISTICS - IVY
SOFTWARE
A band of treasure hunters is trying to determine whether eighteenth-
century pirates buried any treasures on a small island. They figure that if
they find any signs of early settlement on the island that there is a good
chance that treasure is buried there. Which of the following represents
the left-most event or decision node on the treasure hunter's decision
tree?
A) Pirates bury or do not bury their treasure
B) Treasure hunters find or do not find signs of settlement
C) Settlement was or was not built
D) None of the above - ANSWERS-B) Treasure hunters find or do not
find signs of settlement
Which of the following would be best represented by a decision node?
A) Bob rides a cab or a bus to work;, whichever he can find the most
quickly
B) Sal either wins or doesn't win the lottery
C) Jill goes to work for one of two firms who have offered her a position
D) None of the above - ANSWERS-C) Jill goes to work for one of two
firms who have offered her a position
END OF
PAGE
1
, BUSINESS MATH & LATEST
STATISTICS - IVY
SOFTWARE
A local artist has three civic buildings, one of which she wants to paint.
If she paints any of these buildings, she can sell the painting to the
organization that occupies the building, sell the paining to a private
collector or donate it to a small museum. The order for the decision tree
would follow which way?
A) decision node, event node
B) event node, decision node, event node
C) event node, event node,
D) None of the above - ANSWERS-D) None of the above
It would actually be decision node (which building to paint), decision
node (what to do with the painting)
True/False: the Expected Monetary Value (EMV) is a number based on
averaging - ANSWERS-True
Marcie wants to invest her money in the stock of one of two companies:
Writeoff, a maker of erasers, or Outatwon Books, a publisher of travel
guides. She has a 0.7 probability of making $10,000 and a 0.3
probability of losing $25,000 with Writeoff stock, and a 0.45 probability
of making $3000 and a 0.55 probability of losing $500 with Outatown
END OF
PAGE
2
, BUSINESS MATH & LATEST
STATISTICS - IVY
SOFTWARE
Books stock. If she does nothing, she will neither gain nor lose money.
Should she invest in Writeoff stock, Outatown stock or do nothing? -
ANSWERS-Invest in Outatown stock
Referring to Illustration 9 in Chapter 5, it shows the decision tree for
three projects in which the AOK company can invest (they can only
invest in one and must invest). In which one of the three projects should
AOK invest, based on EMV?
A) Project A
B) Project B
C) Project C
D) None of the above, they are all equal. - ANSWERS-C) Project C
True/False: the EMV of an alternative with 0.5 probability of making
$500 is definitely $250. - ANSWERS-False
You cannot calculate the EMV with just this information. You need to
know all possible returns, not just one.All possible outcomes should
equal one, but you only have 0.5 of the information required.
Which of the following nodes could be combined into one?
END OF
PAGE
3
, BUSINESS MATH & LATEST
STATISTICS - IVY
SOFTWARE
A) If Jay decides to go to lunch, he has to decide where to go
B) After Jay decides to go out to lunch, he has to make sure he doesnt
have a meeting and, if he doesnt, he has to decide where to go out to
lunch
C) Jay finds out whether he has a meeting, then he will decide
D) None of the above - ANSWERS-A) If Jay decides to go to lunch, he
has to decide where to go
A has two decision modes, but B has a decision mode and an event
mode, and C has an event node and a decision mode. So only A has two
of the same and can be combined.
Tim has not been doing well in finance class. His professor tells him to
write up a case analysis for her in order to pass the class. He can still
pass the class without the write-up, just like he still can fail with it, since
the final exam is coming up. Which of these decisions would have a
vertical line at the end of the decision node:
A) Do nothing (dont write the case analysis)
B) Pass the final exam
C) Write the case analysis
D) None of the above - ANSWERS-D) None of the above
END OF
PAGE
4
