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CSSBB · Question #173

Perform a risk analysis to determine the expected profit or (loss) from a project which has four possible disjoint outcomes: Outcome A shows a profit of $340,000 and has a probability of 0.25…

The correct answer is C. $154,000. See the full explanation below for the reasoning.

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Question

Perform a risk analysis to determine the expected profit or (loss) from a project which has four possible disjoint outcomes: Outcome A shows a profit of $340,000 and has a probability of 0.25 Outcome B shows a profit of $120,000 and has a probability of 0.40 Outcome C shows a loss of $40,000 and has a probability of 0.10 Outcome D shows a profit of $100,000 and has a probability of 0.25

Options

  • A$130,000
  • B$520,000
  • C$154,000
  • D($168,000)
  • Enone of the above

How the community answered

(25 responses)
  • A
    8% (2)
  • B
    4% (1)
  • C
    76% (19)
  • D
    12% (3)

Topics

#risk analysis#expected value#probability#financial analysis

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