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Question 1
Which statement best describes the purpose of a decision tree in decision analysis?
Correct Answer:
To model decisions under uncertainty using probabilities and payoffs.
Explanation:
Decision trees model decisions under uncertainty by mapping each choice to possible future events, attaching probabilities to uncertain outcomes and payoffs (or costs) to those outcomes. By working backward from the end, you calculate the expected value of each path and choose the option that yields the highest expected value. This approach directly combines likelihoods with consequences to guide optimal decisions under risk. The other tasks aren’t about choosing between options under uncertainty: variance is about dispersion in a statistic, estimating sample size is about planning how many observations are needed, and measuring regression coefficients is about quantifying relationships in a model.
Question 2
What does MAPE stand for?
Correct Answer:
Mean Absolute Percentage Error
Explanation:
MAPE measures forecast accuracy by averaging the absolute percentage errors between actual values and forecasts. The “mean” shows we average across all observations, “absolute” means we use the magnitude of errors (no cancellation from signs), and “percentage” expresses those errors relative to the actual values, giving a scale-free measure. The standard name for this metric is Mean Absolute Percentage Error. The other terms aren’t standard: one uses a median instead of a mean, another misorders the words, and the first option uses an uncommon phrasing. The familiar formula is MAPE = (1/n) Σ |(Actual − Forecast) / Actual| × 100%.
Question 3
With a p-value of 0.03 and alpha of 0.05, what is the decision?
Correct Answer:
Reject H0; result is statistically significant.
Explanation:
In hypothesis testing, you compare the p-value to your chosen significance level. If the p-value is less than the alpha, you reject the null hypothesis and declare the result statistically significant. The p-value represents the probability of observing data as extreme as or more extreme than what you saw if the null hypothesis is true. Here, p = 0.03 and alpha = 0.05. Since 0.03 is smaller than 0.05, you reject the null hypothesis and conclude the result is statistically significant.
Question 4
What is the present value of 5,000 to be received in 3 years discounted at 10% annually?
Correct Answer:
Approximately 3,756
Explanation:
Present value shows how much a future amount is worth today when you discount it at a given rate. Use PV = FV / (1 + i)^t. Here, FV is 5,000, i is 10% (0.10), and t is 3 years. Compute (1.10)^3 = 1.331, then PV = 5,000 / 1.331 ≈ 3,756.57, so about 3,756. This is the amount you would need today to receive 5,000 three years from now at a 10% annual return. The other numbers would come from using a different rate or a different time horizon, not from 10% over three years.
Question 5
An owner must decide whether to move to a new location or renovate. The expected value for moving to a new location is $625,000. Which option best represents this information?
Correct Answer:
$625,000
Explanation:
The key idea is matching the numerical value given for the moving option. The problem states that the expected value for moving to a new location is $625,000. The best representation of that information is the exact amount provided, which is 625,000 dollars. The other numbers don’t reflect the value given for moving, so they don’t represent the information described.
Question 1
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About this Exam

Prepare with the PHFO Quantitative Analysis For Business Pre-Assessment Practice Exam practice quiz. This question bank includes 10 questions covering decision, value, location, moving, and period. Use it to review important concepts, identify knowledge gaps, and build confidence for the related exam, course, or assessment.

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PHFO Quantitative Analysis For Business Pre-Assessment Practice Exam

This practice set contains 10 questions from the matching question bank and focuses on decision, value, location, moving, and period. Work through each question carefully, review the provided solutions, and revisit topics that need more study before your next attempt.

This is an independent study resource intended for practice and review; it is not an official examination or an endorsement by any organization named in the title.

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