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
Example: If c ≠ 0 , evaluate the subsequent integral. Solution Remember that you require converting improper integrals to limits as given, Here, do the integ
Find an integrating factor for the linear differential equation and hence Önd its general solution: SOLVE T^ 2 DY DX+T2
Two cars begin 500 miles apart. Car A is into the west of Car B and begin driving to the east (that means towards Car B) at 35 mph & at the similar time Car B begin driving south
I need answers for these 10 exam questions: 1.Input-output (Leontief) model: main assumptions and construction. Definition of productivity. Necessary condition of productivity of i
which quadrilaterals have only 1 pair of parallel sides
-2-1
What is Exponents values? Exponents were invented as a quick way to show that you are multiplying a number by itself several times. It's too much trouble to write something
Sums and Differences of Cubes (and other odd powers)? You can factor a sum or difference of cubes using the formulas a 3 - b 3 = (a - b )(a 2 + ab + b 2 ) and a 3 + b 3 =
Leo works at the Bagel Shop after school and on Saturdays. He is paid $4.00 per hour after school and $5.00 per hour on Saturday. Last week Leo worked a total of 12 hours and made
Evaluate the given limit. Solution: In this question none of the earlier examples can help us. There's no factoring or simplifying to accomplish. We can't rationalize &
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