Differentiate between aggressive strategy and conservative ...

[CBme]

Differentiate between aggressive strategy and conservative strategy.
 
  What will be an ideal response?

Question 2

A major tire manufacturer wishes to estimate the mean tread life in miles for one of its tires. It wishes to develop a confidence interval estimate that would have a maximum sampling error of 500 miles with 90 percent confidence.
 
  A pilot sample of n = 50 tires showed a sample standard deviation equal to 4,000 miles. Based on this information, the required sample size is:A) 124.
  B) 246.
  C) 174.
  D) 196.

[wuly]

Answer to Question 1

An aggressive decision maker might seek the option that holds the promise of minimizing the potential loss. For a minimization objective, this aggressive strategy is also often called a minimin strategy, that is, the decision that minimizes the minimum payoff is chosen. Aggressive decision makers are often called speculators, particularly in financial arenas because they increase their exposure to risk in hopes of increasing their return.
A conservative decision maker, on the other hand, might take a more pessimistic attitude. Such a strategy is also known as a minimax strategy because the decision that corresponds to the minimum value of the largest cost is chosen. Conservative decision makers are often called risk averse and are willing to forgo potential returns in order to reduce their exposure to risk.

Answer to Question 2

C