Decision under uncertainty

Zed and Adrian and run a small bicycle shop called"Z to A Bicycles". They must order bicycles for the coming month. Orders for the bicycles must be placed in quantities of twenty (20). If Zed and Adrian run out of bicycles during the month, then they will suffer a loss of "goodwill" among their customers. Zed and Adrian estimate that the demand for bicycles this month will be 10, 30, 50, or 70 bicycles but the probabilities for these possibilities are unknown. The table below depicts the profit that results from each possibility.

a.) Determine the best strategy using the maximin criterion. Show work that supports your answer.

b.) Determine the best strategy using the maximax criterion. Show work that sup- ports your answer.

c.) Determine the best strategy using the minimax regret criterion. Show work that supports your answer.

d.) Represent the payoff table in decision tree form.

Use the data below to compute 2014 FCF (Free Cash Flow):

(Round to the nearest whole dollar)

Answer:

A manufacturer knows that their items have a normally distributed lifespan, with a mean of 10.3 years, and standard deviation of 2.4 years.
If you randomly purchase one item, what is the probability it will last longer than 7 years? (Give answer to 4 decimal places.)

A particular fruit's weights are normally distributed, with a mean of 645 grams and a standard deviation of 18 grams.
The heaviest 13% of fruits weigh more than how many grams?
Give your answer to the nearest gram.

Suppose that 59% of people own dogs. If you pick two people at random, what is the probability that they both own a dog?
(Give your answer as a fraction or decimal rounded to 3 places)

About 9% of the population has a particular genetic mutation. 1000 people are randomly selected.
Find the mean for the number of people with the genetic mutation in such groups of 1000. (Remember that means should be rounded to one more decimal place than the raw data.)

A stock price is currently $100. Over each of the next two three-month periods it is expected to go up by 8% or down by 7%. The risk-free interest rate is 5% per annum with continuous compounding. What is the value of a six-month European call option with a strike price of $95?

Given are five observations collected in a regression study on two variables.

(a)

Develop the estimated regression equation for these data.

ŷ =

Use the estimated regression equation to predict the value of y when

x = 20.

Bond A is a 15 year, 9% semiannual-pay bond priced with a yield of maturity of 8%, while bond B is a 15 year, 7% semiannual-pay bond priced with the same yield to maturity. Given that both bonds have par values of $1,000, what would be the prices of these two bonds?

ABC Corporation issued $600,000 of 7% bonds due in 10 years. The bonds pay interest each July 1 and January 1. Assume an effective interest rate of 8%. Determine the price of the bond and prepare an amortization schedule for two years. What is the interest expense for January 1, 2021

A small town gets its water supply from three nearby lakes, A, B, and C. Sometimes in the late summer

the water level in a lake falls below a certain critical level. When this occurs, there is a risk that the water

from that lake will become polluted with E-Coli. If the water supply to the town becomes polluted, the

residents are advised to boil their water. If only the water level at lake A falls below the critical level,

experience has shown that the residents will have a 5% chance of a boil water advisory. Similarly, if

only the water levels at lakes B or C fall below the critical level, chances of a boil water advisory are

4% and 7%, respectively. If two or more lakes fall below the critical levels simultaneously, the risk

of a boil water advisory rises to 40%. Lake A falls below the critical level in 30% of the summers,

while this number is 50% and 20% for lakes B and C, respectively. The probability that exactly two

lakes will fall below their critical levels simultaneously is 12%, and it is equally likely to be any two of

the three. Finally, there is a 3% chance that all three lakes will simultaneously fall below their critical

levels. During some summer in the future:

a) What is the probability that the residents will have a boil water advisory? (answer:0.0914)

b) If the residents have a boil water advisory, what is the probability that the water level will fall

below the critical level at lake B alone? (answer:0.1707)

c) If the residents have a boil water advisory, what is the probability that the water level will fall

below the critical levels at two or more lakes simultaneously? (answer:0.6565)

You are dealt a hand of five cards from a standard deck of 52 playing cards. Calculate the probability of the given type of hand. (None of them is a recognized poker hand.)

1. Double royal interracial wedding: Two kings of one color, two queens of the other color, and a last non-royal card (neither king, queen, jack or ace).

Solve using a formula.

Examples:  C(5,3)C(33,3)/C(14,2) or C(5,3)C(33,3)C(4,1)/C(100,100)

Think of a technology that, in your opinion, clearly affects the workplace. Try to think of a technology that is not so common. (You might also think about the technology you wish to look into for the research paper.)
Create a dialogue / conversation between two people of approximately 100 lines - about two pages. In it, one person must “act” as if the technology has little or no impact on the workplace. The other (you, perhaps) must convince the first of its impact. That last person needs to provide examples of the unanticipated and anticipated consequences of the technology. Provide an