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 dont know how to do it
Find out the Taylor Series for f (x) = e x about x = 0. Solution In fact this is one of the easier Taylor Series that we'll be asked to calculate. To find out the Taylor
Bob is 2 years from being double as old as Ellen. The sum of twice Bob's age and three times Ellen's age is 66. How old is Ellen? Let x = Ellen's age and let y = Bob's age. Sin
find middle term [2a-a2/4]9
If a telephone pole weighs 11.5 pounds per foot, how much does a 32-foot pole weigh? Multiply 11.5 by 32; 11.5 × 32 = 368 pounds.
castor brought 6 3/4 carat cakes to share with 26 students. did castor bring enough for each student to have 1/4 of cake?
Fundamental Theorem of Calculus, Part II Assume f ( x ) is a continuous function on [a,b] and also assume that F ( x ) is any anti- derivative for f ( x ) . Then,
please i need the solution for halm''s differential equation
if perimeter is 300m length is 100m.find the breadth
AskIf y=e^(a?sin?^(-1) x), prove that (1 – x2)yn+2 – (2n + 1)xyn+1 – (n2 + a2)yn = 0. Hence find the value of yn when x = 0. question #Minimum 100 words accepted#
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