When considering expected returns, what is true about the states of the world?
A) They must have probabilities that sum to 100%.
B) They represent all possible outcomes.
C) They are sometimes simplified into outcomes such as boom, bust, and normal.
D) Statements A through C are all true.
Answer: D
Business
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Indicate whether the statement is true or false
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When an Accounts Payable department improves their information system resulting in faster payments to vendors, without the Accounts Receivable Department doing the same, leading to a cash flow crunch, what can we say happened in decision-theoretic
terms? A) optimization B) profit minimization C) suboptimization D) cash flow problems
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