Answer to Question #317057 in Statistics and Probability for Abhishek

Question

Consider the following Decision alternative for the Raman Pahwa, he wants to invest in

stocks, and thought about two situations about tomorrow’s market condition. The figures

(in INR) in the following table exhibit profit per unit of stock-investment.

payoff table:

Favorable market

Unfavorable market

Lakshmi pvt ltd

55

26

Mehta Groups of industries

43

38

Surya

29

43

LT energy

15

51

1. Draw the decision tree

2. If we assign the following probabilities to the states of nature, then determine the

EMV decision.

P(s1) = .4 P(s2) = .1 P(s3) = .3 P(s4) = .2