The Morton Ward Company is considering the introduction of a new product that is believed to have a 50-50 chance ofbeing successful. One option is to try out the product in a test market, at an estimated cost of $2 million, before making theintroduction decision. Past experience shows that ultimately successful products are approved in the test market 80percent of the time, whereas ultimately unsuccessful products are approved in the test market only 25 percent of the time. If the product is successful, the net profit to the company will be $40 million; if unsuccessful, the net loss will be $15million. a. Discarding the test market option, develop a decision analysis formulation of the problem by identifying the decisionalternatives, states of nature, and payoff table. Then apply Bayes’ decision rule to determine the optimal decisionalternative-b. Find the expected value of perfect information. A c. Now including the option of trying out the product in a test market, use TreePlan (and the Excel template for posteriorprobabilities) to construct and solve the decision tree for this problem. A d. Find the expected value of sample information. How large can the cost of trying out the product in a test market beand still be worthwhile to do?

Daniel owns 100 shares of abc corporation's common stock. abc uses the fair value option, and recent declines in the firm's credit rating have caused the value of the firm's outstanding bonds payable to drop by 10%. daniel feels this is good news, but he wants to know what you think about the situation. which of the following represents your best response? a : "this situation may be positive for you in that the change in abc's credit standing indicates that the value of the firm's assets is likely increasing. however, the drop in bond value may negate any positive effects on your bottom line, because it means your claim on the firm's assets is simultaneously decreasing." b : "actually, this is bad news all around. the drop in the value of abc's bonds payable means shareholders' claims on the firm's assets have decreased. moreover, abc's declining credit rating means that the firm's assets are probably also dropping in value, thus magnifying your losses even more." c : "on the surface, this seems like good news because it means your claim on the firm's assets has increased. however, the drop in creditworthiness may also indicate that abc's assets are declining in value, thus offsetting any gains associated with the drop in bonds payable." d : "you're right! this is good news because it means that abc's debtholders have a decreased claim on the firm's assets. as a result, the firm's existing shareholders"like you"have seen their claim on the firm's assets increase."

Beswick company your team is allocated a project involving a major client, the beswick company. although the organization has many clients, this client, and project, is the largest source of revenue and affects the work of several other teams in the organization. the project requires continuous involvement with the client, so any problems with the client are immediately felt by others in the organization. jamie, a member of your team, is the only person in the company with whom this client is willing to deal. it can be said that jamie has:

True or false: a fitted model with more predictors will necessarily have a lower training set error than a model with fewer predictors.