Final Review

Front

What is the expected value of sample information?

Back

The difference between the expected value of an optimal strategy based on sample information and the 'best' expected value without any sample information.

Front

What is MAPE in forecasting?

Back

Mean Absolute Percentage Error, a measure used to compare forecasting methods for different time periods.

Front

What does a payoff represent in decision-making?

Back

A payoff exists for each pair of a decision alternative and a state of nature.

Front

What is a local maximum in the context of marketing expenditure?

Back

A point where increasing marketing expenditure leads to a decrease in sales, indicating the highest sales at that expenditure level.

Front

What is covariance in portfolio selection?

Back

The joint risk for pairs of stocks, indicating how the returns on two stocks move together.

Front

What is the difference between MSE and MAE?

Back

MSE (Mean Squared Error) squares the errors before averaging, while MAE (Mean Absolute Error) takes the absolute value of errors.

Front

What does the term 'efficiency of sample information' refer to?

Back

It measures how much better the expected value of a decision is when using sample information compared to not using it.

Front

What is the significance of a global maximum in marketing expenditure?

Back

It represents the highest possible sales that can be achieved at a specific level of marketing expenditure.

Front

How is the variance of return defined?

Back

It measures the dispersion of returns for a single asset or portfolio, indicating the risk associated with it.

Front

What is the role of decision alternatives in decision-making?

Back

Decision alternatives are the different options available to a decision-maker when faced with uncertainty.