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
what are the factors af 34?
Factor following. x 2 - 20 x + 100 Solution In this case we've got three terms & it's a quadratic polynomial. Notice down as well that the constant
Excuse me, would you give me main points on prime ideals to do project
What is the greatest common factor of 24 and 64? List the factors of 24 and 64. The largest factor that they have in common is the greatest common factor. Factors of 24: 1,
Suppose you start saving today for a $55,000 down payment that you plan to make on a house in 7 years, assume that you make no deposits into the account after the initial deposit,
Reduction -when the original amount and the balance or remainder are known, to find the part that has been given away. (e.g., there were 15 toffees in a container, and there are
Karen is buying a wallpaper border for her bedroom, that is 12 ft by 13 ft If the border is sold in rolls of 5 yards each, how many rolls will she required to purchase? The dis
2x + 3x
A circle touches the side BC of a triangle ABC at P and touches AB and AC when produced at Q and R. Show that AQ= 1/2 (perimeter of triangle ABC) Ans: Since the length o
Using the sketch below and the fact that ∠A + ∠B + ∠C + ∠D = 325, Determine m∠E. a. 81° b. 35° c. 25° d. 75° b. The addition of the measures of the exterio
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