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
I need help. Is there anyone there to help me?
solving
A bag contains 5 red balls and some blue balls. If the probability of drawing a blue ball is double that of a red ball , determine the number of blue balls in the bag.
It is the full blown case where we consider every final possible force which can act on the system. The differential equation in this case, Mu'' + γu' + ku = F( t) The displ
-3x=-57
What is a marketing plan
Rental car agency has 50 cars. Rental rate in winter is 60%. What is probability that in give winter month the rental rate is fewer than 35 cars rented? Use normal distribution to
considring the concept of product life cycle,where would you put viedo games in thier life cycle?
Retail price index This is weighted average of price relatives based on an average household in the base year. The items consumed are divided into groups as liker food, transp
Properties of the Indefinite Integral 1. ∫ k f ( x ) dx = k ∫ f ( x ) dx where k refer for any number. Thus, we can factor multiplicative constants out of indefinite integral
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