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
Children Have Their Own Strategies For Learning Vibhor, aged 7, was once asked if he knew what 'seven lots of eight' are. He said he didn't. He was then asked, "Can you work it
a drawn picture on a graph that includes equations of each line
As1212uestion #Minimum 100 words accepted#
???? ????? ??????? ?? ????? ??? ?? ????? ??????? ??????
Prove that the Digraph of a partial order has no cycle of length greater than 1. Assume that there exists a cycle of length n ≥ 2 in the digraph of a partial order ≤ on a set A
In a group of 1000 people, there are 750 people will speak English and 400 people will speak Russian. How many may speak English only? How many will speak Russian? How many can spe
Product Rule If the two functions f(x) & g(x) are differentiable (i.e. the derivative exist) then the product is differentiable and,
how i found largest cluster in percolation
E1) Do you agree that multiplication and division should be learnt intermeshed with each other, or not? Give reasons for your answer. E2) How would you explain to children wh
Functions of Several Variables - Three Dimensional Space In this part we want to go over a few of the basic ideas about functions of much more than one variable. Very first
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