Find the maximum expected holdings, Mathematics

Assignment Help:

Problem:

A person has 3 units of money available for investment in a business opportunity that matures in 1 year. The opportunity is risky in that the return is either double or nothing. Based on past performance, the likelihood of doubling one's money is 0.6, while the chance of losing an investment is 0.4. Money earned one year can be reinvested in a later year and investments are restricted to unit amounts.

When dynamic programming is used to find the investment strategy for the next 4 years that will maximize the expected total holdings at the end of that period, the problem is formulated as a four-stage process with each stage representing a year. The states sj are the amounts of money available for investment for stage j (j = 1; 2; 3; 4).

Let fj(sj) denote the maximum expected holdings at the end of the process, starting in state sj at stage j.

(a) By clearly explaining your reasoning show that a recursive formula for finding the maximum expected holdings at the end of four years is given by

2018_Find the maximum expected holdings at the end of the four years.png

for j = 1; 2; 3 and 4, where the values of α and β are to be determined.

(b) Write down an expression for f5(s).

(c) Find the maximum expected holdings at the end of the four years.


Related Discussions:- Find the maximum expected holdings

Volume of grains in the silo , The volume of grains in a silo at a particul...

The volume of grains in a silo at a particular time (measured in hours) is given by V (t) = 4t(3-t) m 3 . Find the rate of change of the volume of grains in the silo from first pri

Statistics, A researcher is investigating the effectiveness of a new medica...

A researcher is investigating the effectiveness of a new medication for lowering blood pressure for individuals with systolic pressure greater than 140. For this population, systol

Infinity, Are there more rational numbers than integers?#

Are there more rational numbers than integers?#

Algorithm for division, Also, their inability to apply the algorithm for di...

Also, their inability to apply the algorithm for division becomes quite evident. The reason for these difficulties may be many. We have listed some of them below. 1) There are n

VECTORS, OQRS IS A QUADRILATERAL SUCH THAT OQ= -6,3 OR= -3,7 AND OS= 1,5. T...

OQRS IS A QUADRILATERAL SUCH THAT OQ= -6,3 OR= -3,7 AND OS= 1,5. T IS ON OQ SUCH THAT OT: TQ= 1:2 PROVE THAT QRST IS AA PARALLEGRRAM

Ogive, How many types of ogives?

How many types of ogives?

Definite integration-mathematics, Definite integration It involve integ...

Definite integration It involve integration among specified limits, say a and b The integral    is a definite integral whether the limits of integration are as: a and b

Definition and theorem of derivation, Definition : A function f ( x ) is c...

Definition : A function f ( x ) is called differentiable at x = a if f ′ ( x ) exists & f ( x ) is called differentiable onto an interval if the derivative present for each of the

Representation of a set, Normally, sets are given in the various ways A)...

Normally, sets are given in the various ways A) ROASTER FORM OR TABULAR FORM In that form, we describe all the member of the set within braces (curly brackets) and differen

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd