Draw the decision tree and derive optimal decision

Assignment Help Other Subject
Reference no: EM13193620

You are a bank manager. Ranga has approached your bank for a million dollar loan. The bank can charge 15% interest from Ranga for this loan. The bank will buy government bonds at 5% interest rate in case Ranga's application is rejected. You think there is 8% chance that Ranga would default on his loan based on your knowledge about Ranga. At a cost of about $1000, the bank can investigate and figure out Ranga's complete credit history. 
Based on the past performance, you know that the credit reports give a favorable credit rating 70% of the time when the customer honors loan commitments; and unfavorable credit rating 30% of the time even when the customer honors loan commitments. The credit reports give a favorable credit rating 25% of the time and an unfavorable credit rating 75% of the time when the customer does not honor loan commitments.
• Draw the decision Tree and Derive Optimal decision 
• Compute Expected Value of Perfect Information
• Compute expected Value of Sample Information

Reference no: EM13193620

Questions Cloud

What are the different types of risks : What are the different types of risks? What are the concepts of risk and mitigation as they apply to threat and risk management of an organization?
Find height and radius of largest right circular cylinder : Find the height and radius of the largest right circular cylinder that can be out into a sphere of radius (square root of 3).
Query using natural join : Write a join query using NATURAL JOIN that for every order in the ORDERS table will list the order number and order date along with the cusnumber, last name, and first name of the customer who placed the order.
Find the dimensions of the court : the perimeter of a basketball court is 292 ft. The length is 40ft longer than the width. find the dimensions of the court.
Draw the decision tree and derive optimal decision : You are a bank manager. Ranga has approached your bank for a million dollar loan. The bank can charge 15% interest from Ranga for this loan. The bank will buy government bonds at 5% interest rate in case Ranga's application is rejected.Draw the decis..
What is the difference in percentage of profit : the revised estimated project cost is 19,350. What is the difference in percentage of profit between the orginial estimated cost and the revised estimated cost?
Ethnic inequality play in building a new society : What role does ethnic inequality play in building a new society in Canada?
What is the probability that a randomly selected ball : What is the probability that a randomly selected ball bearing has a diameter greater than 8.1 millimeters?
Study the wbs and gantt charts : Study the wbs and gantt charts provided in figures 3-2 and 3-3. Enter the wbs into project 2007, indenting tasks as shown to create the wbs hierarchy. do not enter durations or dependencies

Reviews

Write a Review

 

Other Subject Questions & Answers

  How curiosity is significant element of creativity

How did those early childhood experiences affect level of curiosity you have today? Considering that curiosity is the significant element of creativity.

  Overview of respiratory system

Working in health care industry, a medical professional should be familiar with the different systems in the body. The respiratory system is one such system that you might encounter when working as a medical billing and coding specialist.

  Greater and greater attention to human resources

The major reason that organizations will need to give greater and greater attention to human resources in the future is?

  Add some words when needed

How would you describe yourself in terms of your ability to work as a member of a team?  With team I can do many things for helping my team and I love to be a helpful person but I don’t like to be a leader of that team, because I know myself very wel..

  Information regarding health care scenario

You work at a health care facility where many of the staff come from other countries. This includes doctors, nurses, and technicians.

  Racial relations and racism

Social inequalities (e.g., race, ethnicity, gender, age) have been stated as one of the most challenging issues facing the United States over history.

  Prejudice-discrimination in diverse organizations

Prejudice and discrimination based upon culture group identity continues in many societies of world and in their organizations. Discrimination among persons in positions of power

  Four factions that emerged in response to foreign influences

List the four factions that emerged in response to foreign influences on Hebrew ways at the time of the Second Temple. Describe in detail the thinking of one of the factions.

  Explain that his reading difficulties are probably fact

She points out that he is a very intelligent child also she cannot understand why reading is so difficult for him. You explain that his reading difficulties are probably related to fact.

  Concern among sociologists who study sports

Which of the following is LEAST likely to be a concern among sociologists who study sports?

  Requirement of informed consent

There are some that believe that there are situations in which informed consent is not necessary, while there are others that believe informed consent should always be administered. What do you think?

  Repatriation

Repatriation is a current debate in the art world concerning the return of cultural objects to their native countries-how do you feel about repatriation? Do you believe that the objects should be returned regardless of circumstances, or do you think ..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd