T. Bone Puckett, a corporate raider, has acquired a textile company and is contemplating the future of one of its major plants, located in South Carolina. Three alternative decisions are being considered: (1) expand the plant and produce lightweight, durable materials for possible sales to the military, a market with little foreign competition; (2) maintain the status quo at the plant, continuing production of textile goods that are subject to heavy foreign competition; or (3) sell the plant now. If one of the first two (2) alternatives is chosen, the plant will still be sold at the end of a year. The amount of profit that could be earned by selling the plant in a year depends on foreign market conditions, including the status of a trade embargo bill in Congress. The following payoff table describes this decision situation: State of Nature Good Foreign Competitive Conditions 800,000 1,300,000 320,000 Poor Foreign Competitive Conditions Decision Expand Maintain status quo Sell now 500,000 -150,000 320,000

2. Statistical measures of stand-alone risk Remember, the expected value of a probability distribution is a statistical measure of the average (mean) value expected to occur during a possible circumstances. To compute an asset's expected return under a range of possible circumstances (or states of nature), multiply the anticipated return expected to result during each state of nature by its probability of occurrence. Consider the following case: Ethan owns a two-stock portfolio that invests in Happy Dog Soap Company (HDS) and Black Sheep Broadcasting (BSB). Three- quarters of Ethan's portfolio value consists of HDS's shares, and the balance consists of BSB's shares. Each stock's expected return for the next year will depend on forecasted market conditions. The expected returns from the stocks in different market conditions are detailed in the following table: Market Condition Probability of Occurrence Happy Dog Soap Black Sheep Broadcasting Strong 0.50 50% 70% Normal 0.25 30% 40% Weak…

For Part B. Options are Excellent, Good, Fair for each blank.

Please show all steps and explain clearly.

The purchase patterns for two brands of toothpaste can be expressed as aMarkov process with the following transition probabilities: Which brand appears to have the most loyal customers? Explain.

. Based on past experience, a company knows that an experienced machine operator will produce a defective item 2% of the time. Operators with some experience produce a defective item 3.5% of the time, and new operators will produce a defective item 9% of the time. At any one time, the company has 53% experienced operators, 33% operators with some experience,and 14% new operators. draw a tree  diagram. Given that the item is defective, what is the probability that it was made by a new operator?

2. The following table shows the income distribution for two groups of people in a country: those who declare to belong to a faith, and those who declare to be free thinkers. Income bracket Middle 13278 2225 Religious outlook Faith believer Free thinker Lower 7940 1241 Upper 4527 813 (a) A person is randomly selected from the group, find the probability that this person is a (i) free thinker. (ii) free thinker given that he/she has middle income. (iii) faith believer or he/she has lower income. (b) Are the events "Free thinker" and "Middle income" independent? Explain your answer. (Note: Round the probabilities to two significant figures)

A social event allows free entrance to those with Aim High credit card or those with the car Elite. The probabilities of having Aim High and Elite among the employees of a company are 0.10 and 0.05, respectively. Having Aim High is found to be independent of owning Elite. If 1,000 invitations are sent randomly to employees of the company, estimate the number who will be given free entrance.