1. Managers are quick to claim that quantitative analysts talk to them in a jargon that does not sound like English. List FIVE terms from Chapter 1 of the text book (Quantitative Analysis for Management, Render et al.) that might not be understood by a Manager. Then EXPLAIN in non-technical terms what each of Five terms means with suitable example where needed.
1) Sensititvity analysis with example
2) Algorithm with example
3) Break even point with example
4) Probabilistic model with example
5) Deterministtic model with example
2. You have $1,000 to invest. All the money must be placed in one of the three investments: gold, oil option, or mutual fund. If $1,000 is invested, the value of the investment one year from now depends on the state of the economy. Assume that each state of the economy isFor each of the following decision criteria, determine the optimal decision:
a) Maximin
b) Maximum likelihood
c) Bayes’ decition rule
d) Suppose that the utility function for the value of the investment (x) one year from now is given by u(x) = ln x. Determine which investment you should choose.