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
Maya gives the children examples of distributive with small numbers initially, and leads them towards discovering the law. The usual way she does this is to give the children probl
darien agrees to sponsor her sister $8 plus $1 for every mile she walks.Write an expression to show her total money
Samantha owns a rectangular field that has an area of 3,280 square feet. The length of the field is 2 more than twice the width. What is the width of the field? Let w = the wid
how do you turn 91 divided by730 into a compatible number
What is the LCM of 4, 6, 18
Give an example of each of the following given below . You do not require to give any justication. (a) A nonempty, bounded subset of Q with no inmum in Q. (b) A subspace of
Draw the direction field for the subsequent differential equation. Draw the set of integral curves for this differential equation. Solution: y′ = y - x To draw direct
One of two complementary angles is 80& of the other. What is the degree measure of the smaller angle?
blackberry consumer profile
l+bx2= 5000+100x2
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