General Studies · Financial Decision Making

A company has used expected values to evaluate a one-off project. The expected value calculation assumed two possible profit outcomes which were assigned probabilities of 0.4 and 0.6. Which TWO of the following statements about this approach are correct? 1. The expected value profit is the profit with the highest probability of being achieved. 2. The expected value gives no indication of the dispersion of the possible outcomes. 3. Expected values are relatively insensitive to assumptions about probability. 4. The expected value may not correspond to any of the actual possible outcomes.