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

Construction, draw a line OX=10CM and construct an angle xoy = 60. (b)bisec...

draw a line OX=10CM and construct an angle xoy = 60. (b)bisect the angle xoy and mark a point A on the bisector so that OA = 7cm

Series solutions to differential equation, Before we find into finding seri...

Before we find into finding series solutions to differential equations we require determining when we can get series solutions to differential equations. Therefore, let's start wit

Distance traveled by car - word problem, Distance Traveled by Car - word pr...

Distance Traveled by Car - word problem: It takes a man 4 hours to reach a destination 1325 miles from his home. He drives to the airport at an average speed of 50 miles per h

Find out the variance and standard deviation, The probability of a rare dis...

The probability of a rare disease striking a described population is 0.003. A sample of 10000 was examined. Determine the expected no. suffering from the disease and thus find out

Find the coordinates of c , Plot the points A(2,0) and B (6,0) on a graph p...

Plot the points A(2,0) and B (6,0) on a graph paper. Complete an equilateral triangle ABC such that the ordinate of C be a positive real number .Find the coordinates of C   (Ans: (

Triangles, The sides of a triangle are x^(2 )+x+1, 2x+1,x^2-1, prove that t...

The sides of a triangle are x^(2 )+x+1, 2x+1,x^2-1, prove that the largest angle is 120 degrees, and find range of x. Ans) The biggest side is x^(2) + x + 1 so findout the angl

What are natural numbers and whole numbers, What are Natural Numbers and Wh...

What are Natural Numbers and Whole Numbers? Natural numbers are the numbers that you "naturally" use for counting: 1, 2, 3, 4, ... The set of whole numbers is the set of

Calenders, on which date of the week does 4th december 2001 falls?

on which date of the week does 4th december 2001 falls?

Estimate percent of the original price will the customer pay, Bikes are on ...

Bikes are on sale for 30% off the original price. What percent of the original price will the customer pay if he gets the bike at the sale price? The original price of the bike

Probability, A card is chosen at random from a pack of playing cards.what i...

A card is chosen at random from a pack of playing cards.what is d probability that it is either a heart or the queen of spades

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