Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
The expected monetary value method
The expected pay off as profit associated with a described combination of act and event is acquired by multiplying the pay off for that act and event combination by the probability of occurrence of the described event. The expected monetary value or EMV of an act is the sum of all expected conditional profits associated along with that act
Illustration
A manager has a choice among
i. A risky contract promising of shs 7 million along with probability 0.6 and shs 4 million along with probability 0.4 and
ii. A diversified portfolio consisting of two contracts along with independent outcomes each promising Shs 3.5 million along with probability 0.6 and shs 2 million along with probability 0.4
Could you arrive at the decision by using EMV method?
Solution
The conditional payoff table for the problem may be constructed as given below:
(Shillings in millions)
Event Ei
Probability (Ei)
Conditional pay offs decision
Expected pay off decision
(i)
Contract (ii)
Portfolio(iii)
Contract (i) x (ii)
Portfolio (i) x (iii)
Ei
0.6
7
3.5
4.2
2.1
E2
0.4
4
2
1.6
0.8
EMV
5.8
2.9
By using the EMV method the manager must go in for the risky contract that will yield him a higher expected monetary value of shs 5.8 million
prove same homotopy type is an equivalent relation
A boy covered half of distance at 20km/hr and rest at 40kmlhr. calculate his average speed.
WHAT IS INTEGER PROGRAMING
What is Terminology of Quadratic Functions ? The function in x given by: F(x) = ax 2 + bx + c, where a 0 is called a quadratic function. The graph of a quadratic function is
A car was machine washes every car in 5 minutes accurately. It has been calculated that customers will arrive as per to a Poisson distribution at an average of 8 per hour. Calculat
a) Determine the distance traveled among t = 0 and t =∏/2 by a particle P(x, y) whose position at time t is given by Also check your result geometrically. (5) b) D
if 500kg of food lasts 40 days for 30 men.how many men will consume 675kg of food in 45 days.
A large pipe dispenses 750 gallons of water in 50 seconds. At this rate, how long will it take to dispense 330 gallons? Find out the number of gallons per second by dividing 75
how can i build Y=2x
Launching a new product (Blackberry Cube) Analysis (target market) Product features Promotions and advertisement sample design (location)
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd