Conclusion

In this course, you learned how to use probability to quantify uncertainty. Probability enables the decision-maker to calculate a quantity called the expected value, which gives you a quantity that takes account of the differing probabilities of the potential outcomes of an event.

Finally, you learned how to use these ideas in situations where there is a range of possible outcomes, some of which may be dependent on earlier outcomes. The technique used was that of a decision tree.

This OpenLearn course is an adapted extract from the Open University course B874 Finance for strategic decision-making [Tip: hold Ctrl and click a link to open it in a new tab. (Hide tip)] .