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
HOW TO FIND THE HEIGHT OF A CYLINDER I NEED IT FOR ASSIGNMENT TO BE SUBMITTED BY 8;00 AM
A racquetball court is 40 ft through 20 ft. What is the area of the court in square feet? The area of a rectangle is length times width. Thus, the area of the racquetball court
The temperature in Hillsville was 20° Celsius. What is the equivalent of this temperature in degrees Fahrenheit? This problem translates to the expression 3 {[2 - (-7 + 6)] + 4
Human resource management Statistics may be utilized in efficient employ of human resources for example we may provide questionnaires to workers to find out where the manageme
how can you memorise you times facts
For inequalities we contain a similar notation. Based on the complexity of the inequality the solution set might be a single number or it might be a range of numbers. If it is jus
Lucas purchased his motorcycle for $5,875.98 and sold it for $7,777.77. What was his profit? To ?nd out the pro?t, you must subtract what Lucas paid for the motorcycle from the
If the area of a small size pizza is 78.5 in 2 , what size pizza box would required for the small pizza? (Note: Pizza boxes are calculated according to the length of one side.)
problem set d, #7
2/6
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