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CIMA Advanced Management Accounting P2 Question # 1 Topic 1 Discussion

CIMA Advanced Management Accounting P2 Question # 1 Topic 1 Discussion

P2 Exam Topic 1 Question 1 Discussion:
Question #: 1
Topic #: 1

A manager must decide which one of three projects should be implemented. For each project the possible outcomes and their associated probabilities can be estimated reliably. The manager has decided to make the decision based solely on which project has the highest expected value of profit.

Which of the following statements are correct?

Select ALL that apply.


A.

The manager will select the project with the lowest standard deviation.


B.

The range of possible outcomes for each project is not important to the manager.


C.

The decision is characterized by uncertainty and the manager is risk seeking.


D.

The manager will select the project with the highest of all of the possible outcomes.


E.

The decision is characterized by risk and the manager is risk neutral.


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