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
Grouping - situations in which we need to find the number of portions of a given size which can be obtained from a given quantity. (e.g., if there are 50 children in a class and t
The width of a rectangle is 30.5% of its length l. Write a formula for the area and perimeter of the rectangle in terms of l only
zeroes of polynomial 2x2-3x-2
1,500cm m
Some important issue of graph Before moving on to the next example, there are some important things to note. Firstly, in almost all problems a graph is pretty much needed.
Sin3x ? Solution) THE FORMULA IS RIGHT ,SO sin3x=3sinx-4sin 3 x
Please help
What is 2 5 ? 2 5 = 2 ×2 ×2 ×2 ×2 = 32
Union of Sets Venn diagram presenting the union of sets A and B or A?B = Shaded area is demonstrated below: A ?B = Shaded area
A poll tilts towards the sun at an 8 o angle from the vertical at it casta 22-ft shadow. The angle of elevation from the shadow to the top of the pole is 43 o . How tall is th
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