A company has used expected values to evaluate a one-off project. The expected value calculation assumed two possible profit outcomes which were assigned probabilities of 0.4 and 0.6. Which of the following statements about this approach are correct? (1) The expected value profit is the profit which has the highest probability of being achieved. (2) The expected value gives no indication of the dispersion of the possible outcomes. (3) Expected values are relatively insensitive to assumptions about probability. (4) The expected value may not correspond to any of the actual possible outcomes.
A、(2) and (4) only
B、(2), (3) and (4)
C、(1), (2) and (3)
D、(3) and (4) only
A、(2) and (4) only
B、(2), (3) and (4)
C、(1), (2) and (3)
D、(3) and (4) only
【参考答案及解析】
The expected value does not give an indication of the dispersion of the possible outcomes; a standard deviation would need to be calculated, so Statement 2 is correct. The expected value is an amalgamation of several possible outcomes and their associated probabilities so it may not correspond to any of the actual possible outcomes, so Statement 4 is correct.
The expected value does not give an indication of the dispersion of the possible outcomes; a standard deviation would need to be calculated, so Statement 2 is correct. The expected value is an amalgamation of several possible outcomes and their associated probabilities so it may not correspond to any of the actual possible outcomes, so Statement 4 is correct.