Mathematics · Decision Theory and Financial Analysis
Which of the following is a recognized limitation of using the Expected Value (EV) technique in decision-making under uncertainty?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It only allows evaluation for a maximum of two outcome probabilities
- 2The expected value calculation may yield an outcome that is impossible to occur in a one-off decision✓
- 3It identifies the maximum possible downside risk associated with an investment
- 4It provides the exact outcome for a single event occurrence
Correct answer
The expected value calculation may yield an outcome that is impossible to occur in a one-off decision
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