A financial planning firm has a decision to make. The companycan buy more stocks (B) now, not buy and not sell stock (N) now, orit can sell its stock (S) now.

The following is from the Google Dictionary:

Bear Market: a market in which prices are falling, encouragingselling.

Bull Market: a market in which share prices are rising,encouraging buying.

The future market will be either Bear (E) or Bull (U).

The following is a payoff table, in thousands of dollars, ofprofit or loss for this firm based on the decision the firm makesnow and the future market.

	E	U
B	44	-29
N	24	-11
S	18	4

The statisticians of the company, using their standard budget,predict the following probabilities:

P(E) = 0.72                                   P(U) = Complement

The statisticians report that if the company is charged andadditional $5,000 above the standard fee, they can do more accurateresearch to obtain sample information that will either be Favorable(F) or Unfavorable (X) with the following probabilities:

P(F) =0.7                                     P(X) = Complement

If the research is favorable, the revised probabilities are:

P(E) =0.82                                  P(U) = Complement

If the research is unfavorable, the revised probabilitiesare:

P(E) =0.31                               P(U) = Complement

Do all calculations, including making the decision tree and anyalgebra, in Excel; organize it and highlight important boxes incolors so that it can be read and understood very easily. Putquestion numbers next to the answers. You may want to use multiplesheets, but please use only one file. Write out all answers,including #15 and #21 in Excel. For all algebra, show work [thewritten steps you went through to find the answer] and type thatinto Excel. Do not submit the paper you may have used to solve thealgebra, just copy it and put it all in Excel.

Very Important: Input the data only once. Afterthat, link all calculations from new cells to previous cells, asillustrated in of the videos. Answers to questions that have theright number but are not linked will be marked incorrect. Projectsthat do not link cells will receive a very low grade.

Please complete the following in Excel, highlighting theanswers.

Find thefollowing:         [The number in the brackets is how many points each question isworth.]

1. The decision using the optimistic approach. [2]
2. The decision using the conservative approach. [2]
3. The decision using the minimax regret approach. [2]
4. The decision using the Expected Opportunity Loss (EOL) [2]
5. EV(B) [1]
6. EV(N) [1]
7. EV(S) [1]
8. Best EMV = The decision using EV [1]
9. EVwPI [1]
10. EVPI [1]

For #11 and #12: make threecomparisons, EV(B) to EV(N), EV(B) to EV(S), EV(N) to EV(S). Youwill have three cutoff points and four test points.

1. The value of probability (p) of E that is the cut off forchanging the best decision. [4]
2. Draw a number line for #11. [4] (sensitivity analysis)
3. The value for which the payoff of E of the best decision mustbe greater than to keep the best decision the same. [4](sensitivity analysis)
4. The value for which the payoff of U of the best decision mustbe greater than to keep the best decision the same. [4](sensitivity analysis)
5. Rank p, payoff of E, and payoff of U from least to mostsensitive and explain why. Make sure to rank them and explain whyyou have chosen your order. [2]
6. The decision tree [6]
7. EVwSI [1]
8. EVSI [1]
9. Efficiency of the Sample Information [2]
10. The Risk Profile [4]
11. Based on the cost of obtaining the sample information and itsefficiency, is it worth obtaining it? Why? Please include ALL therelevant information for this decision and use specific numbers.Your answer must discuss EVSI, net EVSI (The EVSI minus the cost ofthe SI), the Efficiency of the Sample Information (abbreviated \"E\")and the Risk Profile. This is the most important question in theproject, as you are making the decision to purchase the SI usingall you have learned. Answers that do not include all this will notget credit. [4]