Apply the classification algorithm to the following set of data
records. Draw a decision tree. The class attribute is Repeat
Customer.
RID
Age
City
Gender
Education
Repeat Customer
101
20..30
NY
F
College
YES
102
20..30
SF
M
Graduate
YES
103
31..40
NY
F
College
YES
104
51..60
NY
F
College
NO
105
31..40
LA
M
High school
NO
106
41..50
NY
F
College
YES
107
41..50
NY
F
Graduate
YES
108
20..30
LA
M
College
YES
109
20..30
NY...
in a decision tree, decision nodes are the nodes in which
uncertainty is involved that is out of the control of the decision
maker. do you agree with the statement? explain with examples.
projects may vary with the amount of leverage they will
support. for example, acquisitions of real estate or capital
equipment are often highly levered , whereas investments in
intellectual property are not. do you agree with this statement.
explain with examples.
Your statistics professor assigns nice tests, cruel tests or
diabolical tests. Nice tests are the easiest, diabolical tests are
the hardest, and cruel tests are in between. On cruel tests, scores
are normally distributed with μc= 52 and σc= 14. Nice and
diabolical tests have different μ and different σ. Your class has
49 students. The average score for the class of 49 students is
Xbar.
(a) If the first test is cruel, what is the probability that X
bar...
Use a 2 step binomial tree to value a new exotic derivative.
Draw the tree and label the stock prices and derivative values at
each node. The option expires in 6 months. The interest rate is 10%
annually continuously compounded. The Strike Price (K) is 100. The
spot price is at 100. U= 1.2 and D= 0.8 for each quarterly period.
The payoff of this derivative is (ST/K). By this I mean that the
payoff is the price of the...
Use a 2 step binomial tree to value a new exotic derivative.
Draw the tree and label the stock prices and derivative values at
each node.
The option expires in 6 months. The interest rate is 10%
annually continuously compounded. The Strike Price (K) is 100.
The spot price is at 100. U= 1.2 and D= 0.8 for each quarterly
period. The payoff of this derivative is (ST/K). By this I mean
that the payoff is the price of the...
Under what conditions is a decision tree preferable to a
decision/payoff table?
In what types of situations would it be more appropriate to use
a utility framework for decision making rather than an expected
monetary value framework? Give an example.
Decision tree with multiple decision points
Free Spirit Industries Inc. Co. is planning to add a new product
line to make iPlanes. However, Free Spirit Industries Inc. is
considering the possibility of abandoning the project if the demand
for the new product is low.
In the following decision tree table, (1), (2) and (3) represent
decision points, also known as decision nodes or stages. The dollar
value to the right of each decision node represents the net cash
flow at...