risk and uncertainty

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    jaypattnigr
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    In example 1 part c’s answer it says that the expected return without perfect knowledge is $4400 from (b)(i).I woild like to know the reason behind.Thanks


    Avatar of johnmoffat
    John Moffat
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    Have you watched the lecture?

    The reason is that if you are dealing with perfect knowledge, then we only base it on expected values.

    In part (b), when we made the decision (without perfect knowledge) using expected values, then the best decision gave an expected value of 4,400.

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