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Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › risk and uncertanity
respected sir ,
i posted the questions because i did not understood how kit actually answerd at the back . and sir i have seen your lectures studied throuh it and i am preapring my self from you only for september atemp . and the thing i couldnt understand in maximax question where answer stated he the price should be 30 where as the maximum profit was gained at the price of $35 not $30 so kit answer confused me .
and than regret question i rember how you said to do such questions but i was not able to get the answer so again got confused with how he got the answer.
and lastly definition for maximin , it is the worst minumm profit and than select the maximum from those profits(worst outcome) maxiises the minimum profit , but in answer he wronged the statement with profit and instead said that alternative which maximises the minimum pay off achieve able .
these were my queries from those questions sir i didnt wanted to get u mad at me 🙂
I am not mad at you 🙂
For the maximax question, the maximum profit is 1310000, which they get with a selling price of $30, and so the answer in your kit is correct.
Maximising the minimum payoff means finding the worst payoffs (returns) and choosing the alternative that gives the best (maximum) of those minimums, which is the correct definition (and is the same as what you have typed).
The regret table for 15% growth is:
Type A 1,200 (3,600 – 2,400)
Type B 1,800 (3,600 – 1,800)
Type C 0 (because 3,600 is the best).
You do the same for 30% growth and for 40% growth, and then apply the minimax regret rule.