10 probability questions. most of them are already shown with correct answer.

Question 1: It would be a bad decision to pay $200 for a certificate enabling the owner to call the flip of a tack, and if correct, win a gold coin (as in the demonstration from class) if the bidder believed the probability of calling the tack correctly is 0.5.

Answer: false - CORRECT

Question 2: According to the Five Rules minimizing the chance of losing money is the appropriate decision criterion.

Answer 2: false - CORRECT

Q3: One reason we can take the e-value of monetary prospects for most of our professional practice is that the range of prospects we are examining is small when compared to the company's total assets. That is, we are using only a small range of their u-curve.

Answer 3: True - CORRECT

Q4. Eric does not follow the delta property. He has just paid $215 for a certificate that allows him to call the flip of an "unfair" coin. If he calls it correctly he will win $500. If he calls it incorrectly he will win $0.00. His PISP for the certificate is $315. The offers to tell Eric the outcome of the impending coin toss. What is Eric's PIBP for the clairvoyant's information? 

a) $185, 

b) Need Eric's u-cover to determine his PISP for the information, 

c) $285, or 

d) Need Eric's u-curve probability he assigns to the "unfair" coin landing Heads (or Tails) to determine his PIBP for the information.

Answer (d) is not the correct answer. Correct answer is either a,b or c.

5. Ryan does not follow the delta property. He has just paid $150 for a certificate that allows him to flip a "fair" ({H|&}=0.5) coin. If the coin lands heads he will win $500. If it lands tails he will win $100. His PISP for the certificate is $225. The clairvoyant offers to tell him the outcome of the impending coin toss. What is Ryan's PIBP for the clairvoyant's information?

a) $150, 

b) $0.00, 

c)$75, or 

d) Need Ryan's u-curve to determine his PIBP information. 

Answer

$150 is not the correct answer.

6. Which of the following criteria must an information gathering test meet in order to be value adding? 

I. The test results must be observable, 

II. Relevant to the distinction of interest, 

III. Material to the decision you face, 

IV. Economic, meaning it must cost less than its value. 

Which of the four are true? 

Answer

7. Evel's micromort value is $30. He has been offered $10,000 to attempt a stunt where he will jump the Grand Canyon with a rocket-propelled motorcycle. Evel believes he will either complete the stunt successfully or be killed. Because of his great skill (and possible delusion), he believes there is only 100 chances out of a million that he will be killed. Should he attempt the stunt?

Answer:

Yes - CORRECT

Q8: Thomas has 3 coins in his pocket. One coin is "2-Headed", while the other coins each have one "head" and one "tail". He takes one coin from his pocket and without looking at it lays it on the table. He then looks at it and sees that "Heads" is showing. What is the probability that this is the "2-Headed" coin? 

Answer 8: