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

Prove that its inclination theta to the horizontal, Two stations due south ...

Two stations due south of a tower, which leans towards north are at distances 'a' and 'b' from its foot. If α and β be the elevations of the top of the tower from the situation, Pr

Segmentation, what is segmentation and how to used as per the market with e...

what is segmentation and how to used as per the market with example?

Math, 1+3+5+7+9+11+13+15+17+19

1+3+5+7+9+11+13+15+17+19

Abstract Algebra, let R be a (noncommutative) ring. Given that a,b and a+b ...

let R be a (noncommutative) ring. Given that a,b and a+b ? R are all units, prove that a^(-1)+b^(-1) is a unit

Determine the derivative f ( x ) = 2 x2 -16x + 35, Determine the derivative...

Determine the derivative of the following function by using the definition of the derivative. f ( x ) = 2 x 2 -16x + 35 Solution Thus, all we actually have to do is to pl

Statistics, reasons why we use statistics and examples of why?

reasons why we use statistics and examples of why?

Word problem, mark got 15.00 for his birthday he now has 27.00. how much di...

mark got 15.00 for his birthday he now has 27.00. how much did he start with

Properties of radicals, If n is positive integer greater than 1 and a & b b...

If n is positive integer greater than 1 and a & b both are positive real numbers then, Consider that on occasion we can let a or b to be negative and yet have these propert

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