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
Estimate the area between f ( x ) =x 3 - 5x 2 + 6 x + 5 and the x-axis by using n = 5 subintervals & all three cases above for the heights of each of the rectangle. Solution
Cory purchased a frying pan which was on sale for 30% off. She saved $3.75 along with the sale. What was the original price of the frying pan? Use a proportion to ?nd out the o
the probability that an account officer will pass her exam is 5/9. if she pass,the probability that she will be promoted is 3/4. she is not promoted if she fails her professional e
in 1970 a record 1.5 of rain fell in one minute at Basse Terre, guadaloupe in the caribbnean.at this rate, how much rain fell in 3 seconds or 0.05 of a minutes?
i not knoe examples
Coal is carried from a rrrine in West Virginia to a power plant in New York in hopper cars on a long train. The automatic hopper car loader is set to put 36 tons of coal in each ca
can you explain it to me please
Example of Regression Equation An investment company advertised the sale of pieces of land at different prices. The given table shows the pieces of land their costs and acreag
what is dot
A pipe has a diameter of 2.5 inches. Insulation which is 0.5 inches thick is placed around the pipe. What is the diameter of the pipe along with the insulation around it? The i
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