Asked by Nardley Docteur on Apr 23, 2024
Verified
Below is a spreadsheet for the same situation in which a day trader wants to decide on investing $150 in one of the index funds. 
Using PHStat,what is the Expected Value of Perfect Information (EVPI)?
Expected Value
The predicted value of a variable, calculated as the weighted average of all possible values this variable can take; each value is weighted by its probability of occurrence.
Perfect Information
Perfect Information refers to a situation where all participants have comprehensive knowledge of all relevant aspects, eliminating uncertainty.
PHStat
A software tool that enhances Excel with statistics functions, making it easier to perform statistical analyses.
- Determine and appreciate the significance of Expected Value of Perfect Information (EVPI) in the context of making decisions.
Verified Answer
The Expected Value of Perfect Information (EVPI)is $0.58.
Learning Objectives
- Determine and appreciate the significance of Expected Value of Perfect Information (EVPI) in the context of making decisions.
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