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
Solve sin (3t ) = 2 . Solution This example is designed to remind you of certain properties about sine and cosine. Recall that -1 ≤ sin (θ ) ≤ 1 and -1 ≤ cos(θ ) ≤ 1 . Th
Explain some examples of Elimination technique of Linear Equations.
After seeing some children interacting naturally, write down those features of such interactions that make peer learning potentially a better way of learning. Another point that
Graph f ( x ) = e x and g ( x ) = e - x . Solution There actually isn't a lot to this problem other than ensuring that both of these exponentials are graphed somewhere.
Partial Fractions - Integration techniques In this part we are going to take a look at integrals of rational expressions of polynomials and again let's start this section out w
Millie purchased six bottles of soda at $1.15 each. How much did she pay? To ?nd out the total cost of six bottles, you must multiply the cost per bottle through 6; $1.15 × 6 =
HOW TO FIND THE HEIGHT OF A CYLINDER I NEED IT FOR ASSIGNMENT TO BE SUBMITTED BY 8;00 AM
a die was rooled 500 times and number of times 4 came up was noted if the imperical probability calculated from this information 7_10
Solve out each of the following equations. 3( x + 5)= 2 ( -6 - x ) - 2x Solution In the given problems we will explained in detail the first problem and t
For the initial value problem y' + 2y = 2 - e -4t , y(0) = 1 By using Euler's Method along with a step size of h = 0.1 to get approximate values of the solution at t = 0.1, 0
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