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August 11, 2020 at 1:02 am
Hi John From one of your comment here said that ” If a decision is repeated then on average the expected value will be the actual return” Could you please give an example to help me understand this statement? Thank you so much in advance!!!!
John Moffat says
August 11, 2020 at 8:59 am
Suppose there is a 50% chance of an outcome of 100 and a 50% chance of an outcome of 200. If you only do it once then you will get either 100 or 200.
However if you keep repeating then half of the times you will get 100 and half of the times you will get 200. On average it will be 150 each time.
January 13, 2019 at 4:00 pm
Why only two questions
February 20, 2020 at 3:00 pm
Our tests are only meant to be quick checks after each chapter.
As we state throughout our website it is vital that you buy a Revision Kit from one of the ACCA approved publishers. They are full of past exam and other exam-standard questions in the various formats that are in the exam.
May 22, 2017 at 4:56 pm
Sir I have a query that I desperately need helps with. There’s a question on minimax regret in the textbook.
Now base on the video u posted I understand that the table is a table of regrets
And following your teachings I was able to work out the regret table
However I don’t understand the last scenario
Why is the 105 under D is a positive
If I choose D with a loss of 20 over a profit of 85 isn’t that double loss
Shouldn’t the 105 be a negative or a total of losses
Please refer to tx book question and answer below
A company has three projects to select from
Projects D E F
Scenarios 1. 100 80 60 2. 90 120 85 3. (20) 10 85
Pay off table
Projects D E F
Scenarios 1. 0 20 40 2. 30 0 35 3. 105 75 0
February 18, 2017 at 2:30 pm
Ignore that question….I miss read the answer.
February 11, 2016 at 1:23 pm
Sir kindly explain why the expected value is 10.
February 11, 2016 at 4:48 pm
Which question are you asking about?
November 25, 2015 at 2:40 am
Dear John, No 2 is correct for the following question,right? If not true, please expain to me why.Thank you so much.
Which of the following statements is/are correct? 1. Risk-averse decision makers will use the expected value approach to decision making. 2. In a one-off decision, the expected value is a value that can not actually occur.
November 25, 2015 at 7:09 am
Although the expected value will not usually actually occur, it can occur.
(For example, suppose there are three possible outcomes: 10, 15 and 20. Suppose the probability of each of them occurring is 1/3. Then the expected value is 15, which is an outcome that can actually occur.)
Again, it is unusual for it to happen, but it is wrong to say that “it can not actually occur”, because it can 🙂
February 20, 2020 at 8:48 am
Q 1, I agree with you, the expected values can actually occur. But in the lecture for limitations you mentioned expected values will only work for repeat occurrences. The options for Q1, says in a one off decision and thats why I thought option 2 was correct. Please clarify John? Many thanks in advance.
February 20, 2020 at 3:02 pm
If a decision is repeated, then on average the expected value will be the actual return.
For a one-off decision the outcome will be just one of the possible outcomes. Although it is unlikely that one of the outcomes will equal the expected value, it can happen (as in my illustration in my previous reply).
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